Insurance is a legal arrangement between two parties – the insurance company and the person that is being insured. The insurer (Company) agrees to cover the insured’s costs in case of unfortunate events that are previously outlined within the insurance policy.
Some typical examples of these events include sudden illnesses, property damage, traffic accidents, and so on. However, insurances don’t only cover unexpected events, but there are also policies designed to cover everyday events such as reaching a certain age.
Events that are covered in insurance policies are called insurance events. An individual that gets insurance is called an insured person. When the event happens, the insurance company is obligated to pay a predefined amount, and this payment is called the insurance claim or insurance benefit.
The insured person is also obligated to pay a certain amount each month for their insurance policy. The insurance claim is designed to help the insurer or their family go through a difficult period and cover the additional costs caused by the event.
Simply put, this means that getting an insurance plan is basically covering yourself from a particular risk.
When choosing an insurance policy, it is important to consider how significant the risks are that you are covering for and whether it is worth paying for them.