Elements Of Inssurance
Insurance provides a new way for the safety and security of people and their property. Actually insurance is the combination of the different elements and my today’s discussion will revolve around these elements. These are:
- Insurance as transfer system
- Insurance as business
- Insurance as contract
- Insurance as a security
1.insurance as transfer system:-
Basically insurance is like a transfer system in which funds are transferred from one person to another for their need as well as through companies. The first transfer system i.e., from one person to another is the process of transfer of funds at a small scale because a small amount of money or funds are transferred. In this process the money are transferred from one insurer to another and the medium for transferring funds and money is the insurance company.
The common thing between them is that they are both the policy holders of the same company. They both give money to the company of insurance they have joined. The company keeps all their records and if anyone faces a financial loss or property loss then the company that he has joined will grant him the equivalent funds for the loss. In this way the insurance is a way for transfer.
Transfer of funds or products between two companies is a large scale transfer. In this process the companies that have joined insurance company will get the money and funds from the company.
Insurance as a business:
Insurance is basically a type of large and strong business. Actually the insurance company does different kinds of business to maintain its stability. They take money from the policy holders as it is rule for a policy holder that he submits money after a specified period to the insurance company. So by these funds the company manages all its resources and also does a business at a large scale.
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They not only do a single business at a time but they hold several types of business at a time. This Strategy them a big advantage because they get a considerable profit in every business. If due to any reason they face loss in any of the business then this loss can easily be recovered by the profit in other business. They run large types of business in this way.
Insurance as a contract:-
We can describe insurance as a contract too. Contract basically means a sort of agreement that a person does with another or that a company does with another. In this way the contract in terms of insurance is an agreement done between the insurer and the insurance company or between a large company that joins an insurance company. This agreement is about the transfer of funds from one policy holder to other or from one company to another as well.
Consider the example of a policy holder who joins an insurance company as an insurer. The policy holder donated money according to the rules of insurance company. The company keeps all his records and does an agreement with him that if he faces some financial loss then company will help him to recover all the losses.
This means a contract and we can conclude that the insurance can also be defined as a contract.
Insurance as a security:
We can say that insurance is a way of security to a person who joins an insurance company. The policy holder has a great advantage of it. The company does not actually protect the property or life of the policy holder but we can say that it protects the insurer in an indirect way. When the insurer faces loss in any of his properties, his house for example damages or get destroyed in any natural disaster or an accident then the company grants him funds and helps him in recovering the loss.
In a similar way if the person dies accidently or naturally then the company pays funds to the family of the insurer and helps them in all the matters. In this way the insurance company gives security to the insurer and his family.
Similarly the company gives a strong security to the money of the insurer that he submitted to the insurance company. When the period of the insurance given to a policy holder ends the company gives back all the money to the policy holder that was submitted by him.