Definition
of Insurance
A promise of compensation for specific potential future losses in
exchange for a periodic payment. Insurance is designed to protect
the financial well-being of an individual, company or other entity
in the case of unexpected loss. Some forms of insurance are required
by law, while others are optional. Agreeing to the terms of an insurance
policy creates a contract between the insured and the insurer. In
exchange for payments from the insured (called premiums), the insurer
agrees to pay the policy holder a sum of money upon the occurrence
of a specific event. In most cases, the policy holder pays part
of the loss (called the deductible), and the insurer pays the rest.
Examples include car insurance, health insurance, disability insurance,
life insurance, and business insurance.
If you have a family and a mortgage, plan to send your children
to college, or have others who depend upon you for support, life
insurance can protect them by making up for the loss of your income
should you die.
Those who receive payments from an
insurance policy are called beneficiaries. All life insurance policies
require you to make payments, called premiums, for a specific amount
of time. In return, the company promises to pay your beneficiaries
a death benefit should you die.
But, when insurance policies are
not wisely planned and not well coordinated to meet the needs of
a family, the costs can become an excessive drain on finances. This
website will assist the reader in determining: |
Planning Wisely
Life insurance, wisely planned, can make a valuable contribution
to a family's economic security. The basic idea of life insurance
is simple, but the details can be hard to understand. Learning these
details helps you get the most for your dollar. It also helps you
know your family will have income should you die... |
