TNPSC MATERIAL
BASICS OF INSURANCE
Very Important Material for TNPSC Exams !!!
BASICS OF INSURANCE
Introduction Insurance is an important part of our economy. Without the protection insurance affords us, we would have to spend more time and money protecting ourselves from the risks of loss and less time in enjoying life and pursuing goals.
Insurance is a very old concept. Basically, it means many people paying a little money to create a bigger pool of money so that anyone who is unfortunate enough to suffer a loss is reimbursed financially for that loss.
First, insurance is designed to make a loss whole. In the simplest terms, a loss occurs when things you own are destroyed or reduced in value. If your house burns to the ground, insurance will provide the funds to rebuild it.
The idea is to pay for your actual losses without allowing you to make money. This is what an insurer means by making the loss whole.
In addition, it's important to note that an insurance policy is a legally binding contract between two parties. One party is the insured person-you-and the other is the insurance company.
As is true with all contracts, an insurance policy describes the rights and obligations of each party. In addition, the policy identifies how much you must pay to receive those rights. This amount is known as the premium. The policy identifies how much the insurance company is obligated to pay, if certain events should occur. The maximum amount an insurance company
The study of insurance is full of jargon that is unique to the industry. It is important to know these important basic concepts since you will encounter them throughout this course and in your practice of insurance.
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