Insurance is the transfer of risk by an individual, such as yourself, or an organisation, such as your business, to the insurance company. You or your organisation will thus be known as the policy owner. The insurance company receives payment in the form of premium and will compensate you in the event of losses or damages sustained by you.
Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.
The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.
Useful pointers when buying an insurance policy or take care to choose plan
Understand the policy or plan including the product features, conditions, benefits limitations and exclusions
Ensure that the premium or contribution payable is affordable
Ensure that the amount of coverage taken is adequate and suits your needs
Ensure that all material facts are fully disclosed
Deal only with registered agents/licensed brokers or directly with an insurance company
Monitor the period of coverage and time for payment of premium or contribution