Insurance Meaning :
Insurance is an agreement b/w a person / group and company as an assurance of taking care of any financial loss due to the specified reason.
OR it is a method that help an individual or a group to protect themselves from any potential financial loss.
It is also represented by the words: “policy” or “policy cover”.
Who is an Insurer ?
Group or Organization that issue policy-covers is known as an insurance company, insurer or an insura nce carrier.
Who is an Insured ?
The person or Entity who avails or purchase a policy cover is called Insured or a policy holder.
Types Of Insurances :
There are plenty of types of covers available in the market. Below we have discussed about few the most common covers:
Auto insurance covers the policyholder from any kind of financial loss happen due to vehicle accident/damage. It is availed for every vehicle separately. One insurance policy overs only one vehicle.
Health insurance cover a policyholder from medical expenses caused during medical treatments.
Property insurance cover’s your property from different kinds of damage caused due to : flood, earthquake, theft, fire, weather, etc. Different policy covers different reasons, so make sure to ask the policy agent about the types of property insur ance he/she is giving you and things covered under it .
Life insurance is usually availed by a policyholder to secure it’s family future. It provides financial support to a decedent’s family or assigned beneficiary. However, one can’t get this insurance done in the other person’s name without his/her knowledge.
Insurance Value Calculation :
Life Policy Value Calculation
This is basically calculated on the basis of an individual economy or financial status. Insurance companies have 3 different methods to calculate it.
Auto Cover Value Calculation
Its depend on the Vehicle Make, Model and Variant, Owner age and gender, Fuel, also on the claimed made in the past by the owner of the same vehicle.
If, No claim was taken in the is 1st year then:
After 1st year it will deprecated by 10% compared to its value offered at the time of buying a vehicle. Similarly, if NO claimed was raised than the value depreciate by 10% very year.
At the time of buying a vehicle, its coverage value was declared as $10,000. And after one year when you renew your policy that they will offer you a value of:
1st year = 10% ($9,000)
2nd Year = 20% ($8,000)
3rd Year = 30% ($7,000)
4th Year = 40% ($6,000)
5th Year = 50% ($5,000)
Property Cover Value Calculation
There is no specified method for property coverage value calculation.
Insurance Premium Tax (IPT):
This is a form of tax implemented by governments on cover value, in order to raise funds from coverage sector. It may vary from 4% – 20% on different types of covers in different countries.
It is an amount collected by the company from the policy holder in the form of premium. Companies utilize this fund to raise more fund by investing them till the time claims take place.
Author: Arun Rathi