Insurance- Meaning, Types & Development

Meaning of Insurance

Insurance is a contractual agreement between the insurer and the insurance company where the insurance company agrees to compensate the insurer against the loss or damage of any property, life or health of any individual against policy premiums. Most insurance policies are taken voluntarily while some may be forced upon you by the law. One of the most common example of necessary insurance is the car or vehicle insurance which is mandatory in most countries.

The Modern Insurance Sector has moved much beyond the basic insurance schemes and policies of life, medical insurance or your favorite car insurance schemes and has found new markets to capture.

 

Types of Insurance

Commonly seen Insurance Policies

• Life Insurance- Life Insurance is a simple contract between the insured and the insurance company against the life of the individual. This policy is not beneficial for the person insured in the general sense that the money is received on the death of the individual by his family and his/her legal representatives.

 

• Motor Insurance- Motor Insurance is a must by law in most countries and the reason is to protect the financial interest of the individual in case of loss due to theft or accident; in order to cover your hospital bills, motor vehicle damage and also in some cases to ensure the family in case of unfortunate demise of the individual by the accident.

 

• Health Insurance- The cost of medical expenditure has sky rocketed over the years. The total health care spending in America was approximately $3.5-trillion in 2017 and this has created a need for people to buy health insurance no matter how physically and mentally fit you may think you are in order to protect them from any uncertainty that may arise in the future.

 

• Property Insurance- Real Estate has always been a key in providing financial assistance, jobs and opportunities for several other sectors of the economy and it also takes up a large chunk of your finances, therefore it is necessary to ensure a safety of your investment from natural calamities, floods and theft etc. for any other valuables inside.

 

Some of the other common insurance schemes include Fire Insurance, Travel Insurance, Marine Insurance, Mobile Insurance etc.

 

Benefits of Insurance

• Coverage of Loss- One of the basic feature of Insurance is to provide financial coverage against the losses suffered for damage of properties and assets insured.

 

• Family’s Financial Security- No one can replace your family but knowing that your family is protected in case anything happens to you is something that can provide a person with a sense of security and Life Insurance Policies are doing just that.

 

• Business Stability- Different insurance policies such as fire insurance have provided businesses and businessmen with a sense of stability and a peace of mind in order for them to smoothly run their business as insurance companies have given them a relief so that they can focus on their core competencies without worrying about the fear of losses on their assets.

 

Some Unknown Insurance Schemes

Some of the lesser known Insurance Policies that have taken the world by surprise and proven that there is nothing we can’t insure for a price includes:

• Body Part Insurance- If a singer losses his voice or a footballer injures his leg; well there was nothing that could have been done for their careers after that. This type of insurance policy is believed to be the next big thing by major insurance giants for most countries including United States, Europe, China, Japan, Southeast Asia, India & Central & South America. Some of the key & emerging players that are part of coverage and were profiled in current version are Zurich Financial Services, Munich Re Group, AXA, Nippon Life Insurance, AVIVA, Berkshire Hathaway, AIG, ING Group, Allianz, GEICO, MetLife etc.. The policy has had some key takers in the past as well, including Bruce Springsteen has reportedly insured his voice with Lloyds of London for a cool $6 million.

 

• Wedding Insurance- A $40 billion annual industry that gives many people the most memorable occasion of their lives may not always go as planned. Wedding Insurance is an option for people to protect their wedding finances in case of any unfortunate cancellation due to a natural disaster, or a personal tragedy or in some cases may even be due to a bad weather.

 

• Change of Heart a.k.a. Cold feet Insurance- It is not uncommon for either the bride or the groom to chicken out and run away and for someone who still gets a bill after this, well the insurance was started for just that. Although the insurance doesn’t cover getting left at the last minute but I believe it is still something.

 

• Hole-In-One Prize Insurance- Golfing charity events came up with a great idea to give away huge amount of cash prizes and other prizes such as cars if someone gets a hole in one, in order to get the audience’s attention. Similar promotions happen in basketball and football like half-court shot contests in basketball, or field goal contests in football. Well you may call it a fluke but if someone makes it then giving a caraway for free was not something that wouldn’t hurt. Therefore, insurance companies came up a great idea to cover such losses against a small premium as the chances of winning are relatively low. InsureEvents, an insurance company says it has insured a $1 million hole-in-one contest for a mere $300.

 

Lastly the insurance policy which may not be something that is too prominent but it is definitely something that one might laugh about ‘Insurance against Death by Laughter’. Lloyd’s of London known for covering a wide range of things, but the funniest might be the effort to insure a comedy troupe in the event that an audience member died from laughter. According to the BBC, this comedy troupe was so confident in its humor that it asked Lloyd’s for insurance just in case the group was fatally funny. Well I didn’t actually watch the performance, but this has to be one of the punch lines from the show; ‘Don’t worry laugh as much as you want, WE GOT INSURANCE’.