Tuesday 28 June 2011

What is Insurance?

The meaning of insurance: Insurance is a policy from a large financial institution that offers a person, company, or other entity reimbursement or financial protection against possible future losses or damages.
The meaning of insurance is important to understand for anybody that is considering buying an insurance policy or simply understanding the basics of finance. Insurance is a hedging instrument used as a precautionary measure against future contingent losses. This instrument is used for managing the possible risks of the future.

Insurance is bought in order to hedge the possible risks of the future which may or may not take place. This is a mode of financially insuring that if such a incident happens then the loss does not affect the present well-being of the person or the property insured. Thus, through insurance, a person buys security and protection.
A simple example will make the meaning of insurance easy to understand. A biker is always subjected to the risk of head injury. But it is not certain that the accident causing him the head injury would definitely occur. Still, people riding bikes cover their heads with helmets. This helmet in such cases acts asinsurance by protecting him/her from any possible danger. The price paid was the possible inconvenience or act of wearing the helmet; this ie equivalent to the insurance premiums paid.
Though loss of life or injuries incurred cannot be measured in financial terms, insurance attempts to quantify such losses financially. Insurance can be defined as the process of reimbursing or protecting a person from contingent risk of losses through financial means, in return for relatively small, regular payments to the insuring body or insurance company.
Insurance can range from life to medical to general (residential,commercial property, natural incidents, burglary, etc).
  • Life Insurance
    It insures the life of the person buying the Life Insurance Certificate. Once a Life Insurance is sold by a company then the company remains legally entitled to make payment to the beneficiary after the death of the policy holder.
  • Medical Insurance
    This is also known as mediclaim. Here, the policy holder is entitled to receive the amount spent for his health purposes from the insurance company.
  • General Insurance
    This insurance type involves insuring the risks associated with the general life such as automobiles, business related, natural incidents, commercial and residential properties, etc. 

Economy Insurance


Although economy insurance is the most sought after policy, as it caters to the middle- and low-income groups, many people find themselves paying much higher medical costs than they had budgeted for. The problem lies in the lack of knowledge of low-cost medical insurance.

MAKING THE BEST USE OF MEDICAL ECONOMY INSURANCE

Some of the ways to limit insurance costs are:
  • Basics: Take measures to lose weight, exercise, quit smoking, eat a healthy diet and wear seat belts. Doing this may eliminate the need for frequent doctor visits.
  • Join a Health Maintenance Organization (HMO) and use only those health care providers that are on its network list. Going outside the network might cost you substantially.
  • Visit doctors who accept assignments: If you are a member of Medicare, go to only those doctors who accept assignments. This means they will not charge more than what Medicare will pay for a specific procedure. Although you would still be required to pay your deductible and a percentage share of the bill, you will be saved from paying any excess charges. If your doctor does not accept assignment, check with the local Social Security office or your insurer for a list of participating Medicare physicians.
  • If you have a fee-for-service plan, request your doctor to limit his fees to the amount that your insurance will pay.
  • Arrange for your old X-rays and medical records to be sent to your new doctor or dentist. This will help in cutting down costs.
  • Use generic drugs unless there is a valid reason of not doing so.
  • Call your doctor or nurse for advice by telephone. This will save on visitation cost.
  • If you are paying a part of a doctor’s or hospital bill, be sure to get it itemized. Hospitals sometimes add the cost of treatments that you did not receive to your bill. If the services on the bill are listed in code, seek the help of the billing officer in deciphering and verifying them.
  • Get a copy of your doctor or hospital bill to see the amount that was actually paid. Your insurer may have received a discount. Since you might need to pay a percentage of the bill, it should be calculated on the discounted amount, unless the policy states otherwise.
  • If there is a 24-hour emergency clinic in your area, check its costs. These clinics are usually less expensive than a hospital emergency room.
  • Use low-cost mail-order pharmacies run by HMOs to procure your medicines.

Economy Property Insurance

Economy property insurance can vary by hundreds of dollars depending on the size of the property, contents under cover, insured perils and the insurance company involved.

HOW TO BUY ECONOMY PROPERTY INSURANCE

The price of economy property insurance varies from company to company, so it always pays to explore the market for the best deal. Get insurance quotes from different companies and compare them in terms of coverage available and the policy price. One can contact insurance companies directly by visiting their office or sales centers. Some insurance companies sell their products through insurance agents, who are authorized representatives.

Insurance brokers also sell economy property insurance policies. However, since they have relationships with different insurance companies, insurance brokers can offer more choice. Thus, insurance brokers offer different policy covers based on individual needs. They charge a certain percentage of the policy price as commission.
You can also obtain online quotes by visiting the insurance company’s website. Almost every major insurance company has online policy purchase options. Due to the reduced overhead costs and lesser complexity in online purchases, insurance companies offer 10%-20% discount to the online buyers. However, the Internet is flooded with fake insurance policies that pretend to offer economy property insurance quotes. They ask for personal information from the policy seeker to gain undue advantage. Hence, insist on buying online insurance policy from a reputed firm only.

ECONOMY PROPERTY INSURANCE: ESSENTIAL TIPS

Here are some tips on getting economy property insurance:
  • Security features: Insurance companies offer discounts if the building is protected with intact security features. Save on the premium by having storm shutters, break-proof glass, high-quality roofing material, earthquake-resistant design, shock-proof electrical systems, etc. Install electronic surveillance systems and high-quality locks to minimize the risk of theft.
  • Discounts: Insurance companies provide discount on group policies. Also, buy insurance products such as auto, property and flood, from the same company to enjoy loyalty discounts. Policy renewal under the same insurance company will also help reduce the premium.
  • Raise deductibles: Another method to buy economy property insurance is to raise the deductibles. Remember the higher the deductibles, lower will be the policy premium.

Revise the economy property insurance policy at ever renewal term. Exclude contents that have paid for their price. Instead, include new belongings to maximize coverage without increasing the policy price.


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