Know the insurance meaning and definition. Some insurance tips from Suze Orman and know the purpose of insurance according to Debby Fowles. What is insurance? Insurance for investors is an “income protection”. Insurance is one of the “must have” things before you start investing your money.Insurance defines as a system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (called a premium).
Insurances are guaranteed compensation for losses resulting from certain perils under specified conditions in a contract.1
Insurance Meaning, Tips and Purpose – Insurance TermsAccording to Debby Fowles, author of the book entitled The 250 Personal Finance Questions for your 20s and 30s,…
“The purpose of insurance is to protect your assets against catastrophic losses that could damage your financial future. Whether that asset is a house, a car, or your income-earning ability, insurance protects you from financial disaster. Decide how much risk you can assume and insure the rest”.2
Related Terms: Premium, Policy Holder
In insurance industry, a term “premium” is considered as the sum paid by a policyholder to keep their insurance policy in force.
The policy holder is the insured person that owns a life insurance policy, Policy holder may also be a relative of the insured, a partnership or a corporation.
How to Reduce Your Premiums?
A straight advice from Suze Orman in her book YF&B; (The Money Book for the Young, Fabulous and Broke)…
“You can reduce your premiums by choosing a higher deductible. And that’s a smart move because if you make too many claims on a low-deductible policy, your insurer will eventually boost your premium or refuse to give you future coverage”.3
Citations and References:
1BEIKS Insurance Terms Mobile Apps
2Debby Fowles, Author, “The 250 Personal Finance Questions for Your 20s & 30s” 2009 (Adams Media, Avon, Massachusetts, USA) p.118
3Suze Orman, Author, “The Money Book for the Young, Fabulous & Broke” 2005 (Riverhead Books, New York, USA) p.374