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Insurance For Beginners
INTRODUCTION
Welcome to the global business guide. In this context, we will be taking about the insurance industry,
the general definition of insurance, adequate and precise explanation of the definition, brief talk about
the history, the insurer, the insured, classes of insurance, the role of the underwriter in the industry and
how you as an individual can benefit maximally when you get yourself, your car, your house, even that
your business insure. We do hope you will enjoy reading this article and the essence of your quest for
the topic above will be met Insurance Companies.
Insurance is a financial institution classified as a non bank financial institution. They are important
financial inter-mi diaries. It is believed to have originated from the ancient practices of inhabitants of the
valleys of rivers Tigris and Euphrates in the present day Iraqi in about 4.000BC. History has it that in
1800BC, the Babylonians code of Hammurabi contained provisions which had elements of insurance in
the laws that govern their commerce. But today what we have in the industry, both locally and
internationally had moved from just an agreement between two persons into a very big industry across
the globe.
Going by definition, we learn that insurance means a situation whereby someone protects his or herself
against risk and reduce effects of uncertainties as well as distribute loss. Other explanation to this owe it
to the situation whereby a certain amount of money when collected from someone by an insurance
company agrees to pay a compensation or render services to that person if and whenever that person
suffers the kind of loss specified in the insurance agreement; and from the explanation, this is where an
insurance company comes into play since they are the people that will go into agreement with the
person taking any insurance policy against any of his belongings. This industry has widely been believed
as a means whereby people reduce the risk of unforeseen circumstances. As financial intermediaries,
they act as middlemen between the surplus units and deficit units of the economy thereby sustaining
the general growth of the economy.
One may ask, how do insurance companies generate the money used in compensating their policy
holder when affected by any mishap? The answer to this question, will lead us into talking about the
various means via which the insurance companies make their money and how their policy holders are
compensated. The truth is that, the money they collect from their policy holder (i.e one that has an
agreement with the insurance company) is invested in the form of premiums (an extra sum of money
paid in addition to the normal cost of something. by BBC. Eng. dict) and that money is invested in Bonds,
in stocks, mortgages (i.e house) and government securities (in our subsequent article, we will explain
more of this: Bonds, stocks, mortgages and govt. securities). They generate income for themselves and
those who are in their service. They invest their policy holder's money in better business that has short
term maximum returns on investment and from there meet their numerous needs when needed in
claims and losses. These funds themselves are invested, that not only do they earn interest to be added
to the funds, but they also benefit the government, public authorities, and industries whose securities
the investment are spread, because of the investment policy of the insurer (we will explain later), their
reserve funds are not left idle butt are used productively.
Another way via which the insurance companies compensate those who are in their service is that the
contribution of many is used to compensate the few among them who were affected by the misfortune
insured against. So the loss of few people is share by many.
We hope that to this extend, you must have understood the above explanation about insurance
company. Now the next thing we will be considering is the functions of the insurance companies.
Amongst other functions, the main function of the insurance company is risk bearing, the financial losses
of individuals are judiciously distributed among many people, for example, in the case of fire, the policy
holder in fire insurance pays a premium into a common pool, out of which those who suffer loss are
compensated.
FUNCTIONS INCLUDE
1. The insurance industry encourages thrift (i.e money conservation) especially via it's life policies which
provide funds for family, welfare and old age provisions. It provides employment opportunity for those
that have the interest of working with the industry.
The insurance companies works hand in hand with commerce. It owes it's existence to commerce (i.e
business in general both industrial etc) and commerce in return owes it's strong stability to insurance,
this is because it helped in various ways to enhance the general trend in business.
Before we proceed further to other functions, let's explain this two terms: the insurer; the insured as it
will aid us in our understanding.
The insured: This is the party affecting the insurance in other words, the individual or individuals which
is taking the insurance policy. This can be done either directly or indirectly or via an agent or broker.
The insurer: This is the party providing the protection to cover by the policy. The insurer covers every
other terms which includes the underwriter who is a senior official of an insurance company whose
business lies in undertaking new business for the company.
The insurance company has a contract which promises to pay compensation at a future date for a
consideration known as premium (i.e. the money paid by the insured to the insurer for the insurance
cover provided in the policy). Like the way we have it in other contracts, i.e having it that contracts is
based on the principles of offer and acceptance, consideration and capacity to contract. These contract,
especially in insurance involves two parties i.e. the insurer and the insured.

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Pitch Deck Teardown: Xpanceo's $40M Seed deck
 

Insurance for beginners

  • 1. Insurance For Beginners INTRODUCTION Welcome to the global business guide. In this context, we will be taking about the insurance industry, the general definition of insurance, adequate and precise explanation of the definition, brief talk about the history, the insurer, the insured, classes of insurance, the role of the underwriter in the industry and how you as an individual can benefit maximally when you get yourself, your car, your house, even that your business insure. We do hope you will enjoy reading this article and the essence of your quest for the topic above will be met Insurance Companies. Insurance is a financial institution classified as a non bank financial institution. They are important financial inter-mi diaries. It is believed to have originated from the ancient practices of inhabitants of the valleys of rivers Tigris and Euphrates in the present day Iraqi in about 4.000BC. History has it that in 1800BC, the Babylonians code of Hammurabi contained provisions which had elements of insurance in the laws that govern their commerce. But today what we have in the industry, both locally and internationally had moved from just an agreement between two persons into a very big industry across the globe. Going by definition, we learn that insurance means a situation whereby someone protects his or herself against risk and reduce effects of uncertainties as well as distribute loss. Other explanation to this owe it to the situation whereby a certain amount of money when collected from someone by an insurance company agrees to pay a compensation or render services to that person if and whenever that person suffers the kind of loss specified in the insurance agreement; and from the explanation, this is where an insurance company comes into play since they are the people that will go into agreement with the person taking any insurance policy against any of his belongings. This industry has widely been believed as a means whereby people reduce the risk of unforeseen circumstances. As financial intermediaries, they act as middlemen between the surplus units and deficit units of the economy thereby sustaining the general growth of the economy. One may ask, how do insurance companies generate the money used in compensating their policy holder when affected by any mishap? The answer to this question, will lead us into talking about the various means via which the insurance companies make their money and how their policy holders are compensated. The truth is that, the money they collect from their policy holder (i.e one that has an agreement with the insurance company) is invested in the form of premiums (an extra sum of money paid in addition to the normal cost of something. by BBC. Eng. dict) and that money is invested in Bonds, in stocks, mortgages (i.e house) and government securities (in our subsequent article, we will explain more of this: Bonds, stocks, mortgages and govt. securities). They generate income for themselves and those who are in their service. They invest their policy holder's money in better business that has short term maximum returns on investment and from there meet their numerous needs when needed in claims and losses. These funds themselves are invested, that not only do they earn interest to be added to the funds, but they also benefit the government, public authorities, and industries whose securities the investment are spread, because of the investment policy of the insurer (we will explain later), their reserve funds are not left idle butt are used productively.
  • 2. Another way via which the insurance companies compensate those who are in their service is that the contribution of many is used to compensate the few among them who were affected by the misfortune insured against. So the loss of few people is share by many. We hope that to this extend, you must have understood the above explanation about insurance company. Now the next thing we will be considering is the functions of the insurance companies. Amongst other functions, the main function of the insurance company is risk bearing, the financial losses of individuals are judiciously distributed among many people, for example, in the case of fire, the policy holder in fire insurance pays a premium into a common pool, out of which those who suffer loss are compensated. FUNCTIONS INCLUDE 1. The insurance industry encourages thrift (i.e money conservation) especially via it's life policies which provide funds for family, welfare and old age provisions. It provides employment opportunity for those that have the interest of working with the industry. The insurance companies works hand in hand with commerce. It owes it's existence to commerce (i.e business in general both industrial etc) and commerce in return owes it's strong stability to insurance, this is because it helped in various ways to enhance the general trend in business. Before we proceed further to other functions, let's explain this two terms: the insurer; the insured as it will aid us in our understanding. The insured: This is the party affecting the insurance in other words, the individual or individuals which is taking the insurance policy. This can be done either directly or indirectly or via an agent or broker. The insurer: This is the party providing the protection to cover by the policy. The insurer covers every other terms which includes the underwriter who is a senior official of an insurance company whose business lies in undertaking new business for the company. The insurance company has a contract which promises to pay compensation at a future date for a consideration known as premium (i.e. the money paid by the insured to the insurer for the insurance cover provided in the policy). Like the way we have it in other contracts, i.e having it that contracts is based on the principles of offer and acceptance, consideration and capacity to contract. These contract, especially in insurance involves two parties i.e. the insurer and the insured.