Insurance Definitions: What is Meant By Insurance?

By Grace

Looking for insurance definitions? Expand your knowledge about insurances, what is meant by the word insurance or the definition of it. If you are an insurance agent you already know the meaning of insurance. In this page, InvestmentTotal.com will add more financial terms related to our topic. According to Beiks Insurance app, the word defines as “a system under which individuals, business, and other organizations or entities, in exchange for payment of a sum of money (called a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions in a contract”.

It simply means insurance is a product use to protect a business or a life. Experts says insurance is a must before investing money. Types of insurance you should have before investing money are health insurance and life insurance.

If you buy an insurance, you can consider as the policy holder. A policy holder is the insured individual. There are certain contracts between the company (insurer) and you (insured), such as the payment premium, the compensation or the benefits you can get if something happen to you or to your properties.

There are insurance companies that offers different types of insurance. The company also called as the “insurer”. An insurer is “the party to the insurance contract who promises to pay losses or benefits, or any corporation engaged primarily in the business of furnishing insurance to the public.”

Other Insurance Definitions

Insurance means “the practice by which an individual secures financial compensation for a specified loss or damage resulting from risks of any sort, by contract with a company to which he pays regular premiums”, “the profession of drawing up such contracts”, “the contract drawn up”, “the protection afforded by this”, “the premium demanded for such protection”, “the sum for which something is insured”.

Just in case the insured person died or suffer from financial losses, the beneficiaries written in the policy should claim the benefits a.k.a “face amount. The amount that the beneficiaries could get will depends on what it is written on the policy.

Types of Insurance You Usually Need

Most people are taking advantage of insurance, they buy health insurance dental, vision, short-term and even life insurance. The ideal face amount when buying an insurance (life) must be equivalent to at least 3 years or more of your annual income. The number of years is the years of recovery from financial losses. Example, the breadwinner of the family is planning to buy a life insurance. He is earning about $20,000 annually. If the insured died, the beneficiaries should get $60,000. The $60,000 will be use to recover from financial losses since the bread winner died already,

References and Citations:

BEIKS: Version 1.3.0 – Pocket Full of Knowledge on Insurance
The New Lexicon Webster’s Encyclopedic Dictionary of the English Language, Deluxe Edition
Forbes.Com; World’s Richest Man | Financial Derivatives Mobile Apps Value Investing

So, want to add other insurance definitions? In your opinion, do we really need to insure our health, life, car, houses, business, property and even our cash deposits? Leave a comment below.

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