What’s insurance? Our modern society is full of dangers and technology has made it difficult to avoid them. Insurance economics is an important part of risk control. It is an important management technique to efficiently manage risks. It involves:
- Risk confirmation
- Risk analysis
- Risk control method selection
- Methodology to control risk Implementation and evaluation of results
Risk management is the main method of controlling risks mentioned in (3). This is the prevention or reduction of accidents. The flow of cash is the second option. Credit risk is another option. Risk financing is divided into (1) savings/self-insurance that does not pass on risk to others, and (2) insurance that passes risk on to others.
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Insurance and savings: The difference
(1) You can save money by depositing money in an institution of finance to prepare for “sudden situations” or “predictable circumstances”. However, you will not have enough savings to cover large losses such as personal injury caused by car accidents.
You can only spend the amount you have already saved. (It can take years to save large sums of money.
If you purchase insurance, however, you may be eligible for a large guarantee (compensation), as long as you pay the premium.
(2) Self-insurance
This is a way for a large company that has a lot of buildings, vehicles, and vessels to reserve before the event to take care of the risks.
It’s not like insurance in that it doesn’t spread the risk over a large number of companies.
(3) In the event of default by the debtor, the insured creditor may suffer damages. However, the guarantor who is third party will still have to pay the debtor the same obligations. It is a way to share the burden.
It works in the same way as insurance except that the third party assumes the risk of others. Instead of gathering a lot of subscribers and guaranteeing the guarantee for an additional fee (premium), such as performance guarantee and mortgage guarantee, the guarantee is underwritten by a single person. In most cases the guarantor will pay no fees for the insurance. However, in many cases the guarantor’s assets will be used to cover the debtor’s default.
Insurance Features
There are many other strategies than insurance to help you prepare for potential risks. One way to do this is by setting aside money. In the unlikely event of economic loss, savings can be used for coverage. Insurance allows many people to share their costs and help each other. In this way, you can get the money you need in an emergency. It is said that savings is triangular and insurance is square.
Below is a list that shows some of the schemes you could design to mitigate risk. I believe this will help to highlight the distinct aspects of insurance.
What is the distinction between insurance and mutual assistance?
Insurance that can only cover a specific number of people is not mutual assistance. Mutual assistance can be used for people who are limited to a particular field, profession or member of a government-owned organisation.
What are the differences between insurance and derivatives,
While non-life insurance provides no more compensation than the damage, derivatives pay the agreed upon amount upfront, regardless of what the actual damage is. While non-life insurance requires an assessment of the damage, derivatives can pay out in very little time, if conditions are met.
What are the differences between insurance and investment trusts,
Insurance is a means of covering economic loss (damages) due to unexpected events, accidents, or other unforeseeable events. The contract will specify the amount of insurance. Investment trusts are an arrangement that allows you to make a profit managing and investing funds. Returns fluctuate depending upon the performance of your investments.
Insurance classification
The following classification of insurance is determined by the Commercial Code as well as the license agreement. Additionally, the term “third industry” or “third segment” is used to refer to insurance that does not apply to non-life insurance, life insurance, or life insurance. Since 2001, the two insurance companies have been allowed to operate.
First Field (unique field in life insurance)
Term insurance. Whole life insurance. Endowment insurance.
Insurance guarantees that you will receive a fixed amount of insurance money. It covers premiums for insurance that is required in the event of the death or life of an individual.
2nd field (unique field for non-life Insurance)
Fire insurance and automobile insurance, liability insurance, maritime insurance, etc.
Insurance that promises to cover damage that could be caused by certain types of accidents, and also pays premiums.
3rd field
Medical insurance, accident insurance, long-term insurance, etc.
A policy that offers a minimum amount of insurance to cover illnesses and injuries and long-term healthcare.
How to choose an insurance company
Licence
For certain types of insurance, the company must get a license. To determine if the license you need is available, check the Bank of your country. This can be done online at the Bank of your country. Look at the table “Subjects insurance business”, find the company that interests you, and then download it. Online licensing availability can also checked.
Tariffs
The Bank of your country must approve insurance tariffs. A scammer may charge very low rates. On the insurance company’s site, you can find out the estimated cost of your policy. You can calculate the cost by visiting the websites of different companies and then compare the numbers. You should note that the insurance price will increase if there is more risk in the contract.
Reputation
It is important to look for well-respected businesses that have been on the market for a while. Ask your friends and family to look at the reviews online.
Conditions
Pay attention to your insurance terms and conditions. It is important to request the entire contract. Pay attention to section in which signs are designated as insured events. Find out which coverage your insurance does not provide. Ask the representative questions about indemnification and timing in various situations.
