Things To Consider Before Taking An Insurance Policy

INVESTOPAPER

Introduction To Insurance

The life of the modern man is always accompanied by the possibility of disaster or risk. People face uncertainty in their personal life, employment, business dealings, etc. Doing business can lead to a variety of contingencies and accidents. Insurance is a way to avoid such uncertain risks. Insurance is a means of obtaining compensation by transferring uncertain types of future risks.

Individuals or communities exposed to the uncertain risks of the same nature should pay insurance premiums as per their risk. If the event is insured through contract, the loss is compensated through insurance. As the accident is always uncertain, the insurance company does not pay compensation for everyone but only pays to the person or organization who has suffered the loss and paid the insurance premium for the risk covered.

Insurance Contract

Insurance is a contract of risk transfer. Every contract or agreement is concluded between two parties. When insuring, an agreement is made between the company (insurer) and the insured. In this, the burden of compensating the risk incurred is transferred to the insurer through the contract. For this, the insurance company charges a premium. The premium can be paid in part or in lump sum.

After the payment of the premium, the insurance company will bear the loss without exceeding the limit specified in the assessment as accepted, in case of loss due to the risk specified in the subject matter of the insurance.  An insurance contract is called an insurance policy. The name, address, risk details, insurance premium paid, insured item/person or other insured premises or insurance term, condition or other restrictive provisions are clearly described in the policy. As per the condition in each contract, if there is any change in the risk, it should be informed. The claim (loss) should be disclosed, the method of resolving the claim in case of dispute and if there is any restriction in compensation, the condition should be mentioned.

There are two main types of insurance: life insurance and non-life insurance (general insurance). Life insurance includes whole life insurance and term life insurance. Likewise, the non-life insurance includes fire insurance, marine insurance, aviation insurance, motor insurance, engineering insurance and miscellaneous insurance.

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Things To Consider Before Taking An Insurance Policy

When you insure without understanding the matter, you have to face various hassles. Therefore, the person or organization that wants to insure should pay attention to the following things while insuring:

  1. It should be clarified what amount of risk you need to insure and whether the purpose is fulfilled after insuring.
  2. The insurance policy should clearly state the nominee (person to receive the claim if the one who insured is not available).
  3. When insuring, the facts related to the subject matter of the insurance should not be hidden and false details or information should not be given. The insurer will not provide compensation if the facts are found to be concealed or false.
  4. When insuring, you should also pay attention to whether the premium equal to the amount you have specified can be paid during the insurance period or not.
  5. All the details, terms, facilities and other provisions mentioned in the insurance policy should be read carefully. If it is not as you wish, you should contact the concerned insurer immediately.
  6. All insurance related documents such as insurance policy, cash receipt, etc. should be securely kept. These documents are required for the purpose of claim payment.
  7. When submitting the premium, take help if needed from the trusted insurance agent only by checking whether he/she has got the official permission from the insurance board or not.
  8. After paying the premium, you must securely keep the cash receipt with you and secure it.
  9. Insured transactions should be reported to household members. At least, provide the information to the desired person.
  10. The premium should be paid on time considering the date of renewal of the insurance policy.

Suggested Readings:

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