INSURANCE

In insurance, the insured makes payments called "premiums" to an insurer, and in return is able to claim a payment from the insurer if the insured suffers a defined type of loss. This relationship is usually drawn up in a formal legal contract, also known as a "policy". The contract will set out in detail the exact circumstances under which a benefit payment will be made and the amount of the premiums.

Insurance attempts to quantify risk by pooling together a large number of risks. This makes use of the law of large numbers. As applied to insurance, this means that the greater the number of similar risks, the greater accuracy with which insurers can estimate the overall risk.

Insurance companies also earn investment profits, because they have the use of the premium money from the time they receive it until the time they need it to pay claims. This money is called the "float". When the investments of float are successful, they may earn large profits, even if the insurance company pays out in claims every penny received as premiums. In fact, most insurance companies pay out more money than they receive in premiums. The excess amount that they pay to policyholders is the cost of float. An insurance company will profit if they invest the money at a greater return than their cost of float.

Types Of Insurance Companies: Insurance companies may be classified as:

• Life insurance companies, who sell life insurance, annuities and pensions products.
• Non-life or general insurance companies, who sell other types of insurance.
• Composite insurance companies, who may sell both life and non life insurance.
• Reinsurance companies, who sell insurance cover to other insurance companies.
• Insurance Brokers, Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies.

In most countries, life and non-life insurers are subject to different regulations, tax and accounting rules. The main reason for the distinction between the two types of company is that life business is very long term in nature - coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers shorter periods, such as one year. Reinsurance companies help insurance companies to spread their risks, and protects them from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves.

Insurance companies are also often classified as:

• Mutual companies, which are owned by the policyholders.
• Stock companies,  which are owned by  stockholders.

Type Of Insurances: There are many types available, but the most common are:

• Auto insurance
• Health insurance
• Dental Insurance
• Business insurance
• Disability insurance
• Homeowners / Tenants Insurance
• Medical Insurance
• Life insurance
• Annuities Insurance
• Travel insurance
• Motorcycle insurance
• Pet Insurance
• Term Life Insurance
• Other insurance

Insurance is the necessity of today. So go apply for one you need.