There are dozens of different types of insurance, the insurance you have to take by law (such as motor insurance) policy is a good idea to have (such as insurance content) that are ” nice to have “rather than needs.
Figures from the Association of British Insurers show that during the recession, one in four people who canceled his insurance. If it’s a good idea to make sure not to pay for insurance is not mandatory, you should always think about what would happen if a disaster to strike before the cancellation of any insurance policy.
How do insurance?
When you take out insurance, you pay a premium to the insurance company. If a claim is not, never to return the money, but it is combined with the premiums of others who have taken out insurance with a particular company.
This may seem a bargain, but the idea behind insurance is that everyone pays into a pot of money, knowing that only some of them never have to make a claim. If you need to make a claim (perhaps because the washing machine flooded the kitchen and damaged the floor), the money comes from the pool and bonus policies of others.
How premiums are calculated?
Insurers are professional risk takers, which means they know the probability of different types of hazards through what can calculate the premiums needed to create a fund large enough to cover probable losses of payments.
It is clear that only part of the insured make a claim within one year. Therefore, the insurer will be two important factors in determining the premium. First, how likely is it in general terms that someone will have to call the other hand, if the person who wants to pursue a policy of risk is more or less “average” of politics.
Take three examples. In auto insurance, a young man with a car power ahigh or driver with a long history of accidents to pay a higher premium than the mature and experienced driver with a car with a smaller engine that has not had a accident before.
Similarly, the owner of a chip shop fish and pay a higher premium for fire insurance, for example, the owner of an office. The risk is greater, so that the premium is higher.
Someone who is young, fit and in a safe use will be easier to buy a life insurance policy and pay lower premiums than someone who has heart disease or a risk profession.
The quality is also affected by the will of the insurance company to reach a particular market sector. Therefore, if an insurer wants to encourage young drivers to buy insurance from it, may decide to undermine the premiums charged by some of its rivals.
Two types of insurance
There are two different types of insurance – life insurance and general insurance.
Pay general insurance:
If a car has an accident or theft
If a house catches fire or is stolen
If a holiday should be canceled
Most life insurance policies, however, pay when an event occurs, for example, when someone dies.
Anyone can buy a life insurance policy, but the amount you pay the premiums on your age, health, and type of work you do. The younger and healthier you are, the cheapest life insurance premiums. But if you work in dangerous work, you must usually pay more for life insurance.
Most types of insurance policies are annual. This means that the amount you pay may change each year, and if you make a claim against the previous year or the circumstances have changed, which could affect your premiums.
However, some types of insurance such as life insurance and insurance that pays a portion of your income if you can not work because you are seriously ill, are long term. This means that without an appointment to renew every year the premium is set when you register.
If you have a joint mortgage with her husband, wife or partner, you can hire a life insurance policy that pays if you die before the mortgage is paid. However, we can not hire someone unless of course you would be economically disadvantaged if they are dead.
What is excess?
With many general insurance policies, you must pay the first part of a claim – known as the excess – if something goes wrong. The level of openness can vary considerably. Travel insurance can be £ 25 – £ 50, while for car insurance can be 100 pounds or more.
Sometimes, insurers impose a high excess if you have already claimed by some, and most likely to return to her, such as damage caused by flooding and subsidence (when a building develops cracks, because the bases have been moved) .
General Principles
Other principles apply to all types of insurance:
Insurance can compensate for the actual value of the property. You can not cover the loss of sentimental value, for example.
There must be a large number of similar risks, so that the probability of a claim may not be distributed to other subscribers. It should be possible for insurers to calculate the probability of loss for which a premium may be adjusted to match the risk.
Losses must be deliberate and not inevitable. It is clear that you could not buy fire insurance for a house that was already burning nor life insurance for someone on his deathbed.
Finally, there are risks that have significant financial implications if they can be processed by the State. These risks (especially those resulting from war or major leakage of nuclear materials or radioactive) are not normally insurable.
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