The concept of insurance is very simple to understand. You pay a monthly or yearly fee to the insurance company to insure your life, health, vehicle, property, etc for a certain period. In return, the insurer pays for the financial damages in case of any harm to the insured person or object.

What do we learn from insurance?

Unforeseen tragedies such as illness, injury or permanent disability, even death – can leave you and your family facing tremendous emotional stress, and even grief. With insurance in place, you or your family’s financial stress will be reduced, and you can focus on recovery and rebuilding your lives.

What is new for old in insurance?

In insurance terms, ‘new for old’ means that, should you need to make a claim, you’ll be given the equivalent value of the item that has been lost, damaged or stolen. This means that wear and tear will not be taken into account when assessing the value of your belongings.

What was the first thing to be insured?

The first known insurance contract dates from Genoa in 1347, and in the next century maritime insurance developed widely and premiums were intuitively varied with risks. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance.

What is the concept of a replacement policy?

Replacement policy is an insurance policy between an insurance company and a consumer which promises to pay the insured the replacement value of the subject of the policy if a loss occurs.

How do insurance premiums work?

A premium is the amount of money charged by your insurance company for the plan you’ve chosen. It is usually paid on a monthly basis, but can be billed a number of ways. You must pay your premium to keep your coverage active, regardless of whether you use it or not.

What do you need to know about insurance?

Insurance is key to protecting yourself against financial ruin — Insurance is a strange investment in that people pay for it, but hope they’ll never need to use it.

How are insurance premiums used by the insurance company?

The fee paid by the insured to the insurer for assuming the risk is called the premium. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims – in theory for a relatively few claimants – and for overhead costs.

Why is insurance important for a young adult?

Insurance may seem like a waste of money for young adults beginning their careers, but this investment may be the one thing that protects them against financial ruin for the rest of their lives.

What do insurance companies don’t want you to know?

And there you have it. For even more on this important subject, check out insurance expert Todd Erkis’ user-friendly guide to insurance: What Insurance Companies Don’t Want You to Know: An Insider Shows You How to Win at Insurance. As I’ve discovered the hard way, what you don’t know CAN hurt you.