A large number of people around us are ready to insure against any particular loss. The basic principle of insurance is (risk pooling) and large number of people are willing to pay the required premium for insurance. This group of people is called insurance pool. And insurance companies know that the number of people interested in insurance is huge. And the possibility of insurance cover for all of them is almost impossible. And similarly, the insurance company allows other companies to collect money at intervals. And if any such seduction is made then you can also claim. The most common example of this is auto insurance. Almost everyone has car insurance. But the question arises that everyone has car insurance, so who has made the insurance claim till date. Similarly, you always pay the insurance company for the possibility of loss. And according to the policy, if the event mentioned in the insurance contract happens, you will be paid.
When you buy insurance, you pay a certain amount as per the policy premium of the insurance company. But if you make a claim, the insured will pay the losses that are included in the insurance policy premium.
Insurance companies use risk data to calculate the probability of an event. For which you want insurance. And this process is called underwriting i.e. the process of assessing the risk to the insured. The Company always seeks the value of the entity to be insured as per the agreement reached between the parties. Now let me give an example here like you have insured your house for 80 lakhs. The insurance company will consider the actual value of the house. And with the house you will have many parts but it is impossible to put a price on parts.
Similarly, insurance policies have different terms and conditions. But three basic principles are the same for all types.
- The material provided for each property is at its gross value and does not include sentiment testing
- The coverage of any claim should reach all the policy holders so that the premium for the insurance policy cover is easy
- Any kind of damage or accident should not be intentional
The first two points of the insurance policy were covered in the above article, while we will explain the third point in detail here.
An insurance policy is a contract based on good faith. Which is settled between a common citizen and an insurance company. It is a contract based on good faith which means that there is an unspoken understanding between the insured person and the insurer which is not usually present in contracts. The contract involves the insured person and the insurer agreeing that there is no false claim. While the full disclosures should be clear on both sides. And if you fail to provide all truthful information to the insurance company, the insurance company may refuse to prove your claim.
Result:
Every financial plan has its own risk protection. Always the insured person should estimate and evaluate his financial costs. You should review your current work situation and all expenses.
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Thanks for reading: How does insurance work, Sorry, my English is bad:)