Insurance Basics

Insurance Basics

• The primary purpose of an insurance company is to assume financial responsibility for losses from an insured risk.
• Insurance is based on the concept of a large group of people paying premiums into a fund to help those who suffer a hardship.

Insurance Terms

• The financial interest that a person has in the subject matter of an insurance policy is called insurable interest.
• Premium is the periodic payment made by a policyholder to an insurance company.
• The primary benefit of purchasing an insurance policy is protection against possible financial loss and peace of mind.

Insurance Types

• The primary purpose of life insurance is to provide a lump sum known as a death benefit after death.
• The main difference between general insurance and life insurance is that general insurance is a non-life insurance product, while life insurance covers life.
• Whole life insurance provides life-long protection with a savings plan.

Annuities and Endowments

• The primary purpose of an annuity contract is to protect and grow your money and provide a stream of income during retirement.
• When you're ready to start receiving retirement income, an annuity is turned into a steady stream of income payments.
• The main difference between term insurance and endowment insurance is that term insurance is for a limited period, while endowment insurance is for life.

Medical and Health Insurance

• The main benefit of having a medical and health insurance policy is that it ensures you don't have to worry about the cost of seeking treatment during emergencies.
• Certain exclusions are a common feature of medical and health insurance policies.
• The primary difference between an annuity and a medical and health insurance policy is that an annuity provides a stream of income during retirement, while a medical and health insurance policy provides coverage for medical expenses.

Motor Insurance

• A motor insurance policy covers third-party bodily injury and death, third-party property loss or damage.

Travel Insurance

• Hospitalization and medical expenses covered under travel insurance include hospitalization, hospital or surgical expenses, outpatient medical expenses, and daily allowances up to a maximum number of days.
• The purpose of repatriation in travel insurance is to return the remains of the insured to their home country.
• Accidental loss or damage to baggage, clothing, personal effects, and even money is covered under accidental loss or damage to your baggage.
• The primary reason for reimbursement of expenses incurred due to loss of travel or accommodation is to cover unexpected travel-related expenses.

Takaful Insurance

• The principle of Takaful is based on cooperation among policyholders for their common good.
• The role of policyholders in Takaful is to cooperate among themselves for their common good.