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What is Insurance? Insurance is a form of shield against financial losses due to an unexpected event.

vent. Insurance is the process of distributing risks. We can say, a way of risk management. Insurance is a way of transferring the risk of a potential loss, from one entity to another, in return for fixed payments called premium. Insurance is an intangible product. Insurance is the system by which losses suffered by a few are spread over many, exposed to similar risks.

Insurance provides financial protection against some of the uncertainties in life. Basically its a contract between (2 parties) Insurer and Insured

Evolution of Insurance
Evidence exists of burial societies as far back as the days of the Roman Empire, where the members contributed to a fund and had their burial costs met by the society. Over a period of time Insurance has grown into a multifaceted industry encompassing all areas of society. The present day Insurance can be broadly classified as Life Insurance, General Insurance and Health Insurance. The scientific basis for conducting life assurance was developed by a mathematics teacher James Dodson, who realized that the premiums paid into the fund rested on the principle of probability, i.e., how likely it was that the person might die. He produced the first mortality table a table showing the numbers of people who died at each age between the years 1756 and 1759. Using this mortality table, compound interest and probability he calculated a premium for each age which would remain fixed for life and which would yield a guaranteed sum on death.

Insurance and Assurance


Insurance - Normally refers to protection against a loss resulting from an Accident which may or may not happen e.g., Motor insurance Assurance - Refers to protection against the occurrence of something bound to happen, e.g., Life assurance. Life Assurance is a contract which is bound to produce a death benefit, although this is not always the case. Usually, it is a long-term contract for which the premium is fixed and cannot normally be lowered or raised. In comparison, General Insurance contracts are for a term of one year and must be renewed at the end of the term. Short-term contracts are also available for Holiday and Travel. At each renewal the case is reviewed and premiums depend on the Claim history. If there is no claim the insured will get a discount in premium.

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