| What is insurance? | | | | to receive the death benefit]. Some types of |
| | | | life insurance policies also enable |
| Insurance is a means of providing protection | | | | policyholders to save money. Such policies |
| against financial loss in a great variety of | | | | have a cash value. A policyholder may borrow |
| situations. It is a contract in which one | | | | money against the cash value or surrender the |
| party agrees to pay for another party's | | | | policy for its cash value. |
| financial loss resulting from a specified | | | | |
| event. | | | | Annuities |
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| Insurance works on the principal of sharing | | | | These are savings plans sold by insurance |
| losses. If you wish to be insured, against | | | | companies to provide a fixed and regular |
| any type of loss, agree to make regular | | | | retirement income. If the annuitant [owner of |
| payments, called premiums, to an insurance | | | | the annuity] dies before receiving the |
| company. In return, the company gives you a | | | | guaranteed number of payments, the insurance |
| contract, the insurance policy. The company | | | | company must continue the payments to the |
| promises to pay a certain sum of money for | | | | beneficiary. |
| the type of loss stated in the policy. | | | | |
| | | | Dividends |
| History | | | | |
| | | | Some insurance policies refund part of the |
| Insurance is thousands of years old. The Code | | | | premiums in the form of dividends. Such |
| of Hammurabi, a collection of Babylonian laws | | | | policies are called participating policies. |
| of 1700BC, is believed to be the first form | | | | An insurance company pays dividends if the |
| of credit insurance. A borrower did not have | | | | money it collected in premiums exceeds the |
| to repay a loan if personal misfortune made | | | | amount needed to pay benefits and |
| it impossible to do so. Insurance as we know | | | | administrative costs. Dividends may also |
| it today can be traced to the Great Fire of | | | | include a share of the profits the company |
| London in 1666, which devoured 13,200 houses. | | | | earned on investments made with premium |
| In the aftermath of this disaster, Nicholas | | | | funds. Dividends are most commonly paid on |
| Barbon opened an office to insure buildings. | | | | life insurance. |
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| Types of Insurance | | | | 2. Private Health Insurance |
| | | | |
| Insurance generally covers situations | | | | Health insurance pays all or part of the cost |
| involving pure risk - that is, situations in | | | | of hospitalization, surgery, laboratory |
| which only losses can occur. Such situations | | | | tests, medicines, and other medical care. The |
| include fire, floods and accidents. People | | | | rising cost of medical care has increased the |
| also buy insurance to cover unusual types of | | | | need for adequate health insurance. You could |
| financial losses like, a dancer might insure | | | | suffer a major financial hardship without |
| her legs against injury. There are mainly | | | | such coverage, especially in case of a |
| three types of insurance policies sold: | | | | serious illness or accident. |
| | | | |
| 1. Life Insurance | | | | Dental insurance is one of the |
| | | | fastest-growing types of health insurance. It |
| A life insurance policy provides that the | | | | helps pay for a wide variety of dental |
| insurance company will pay a certain amount | | | | services. |
| when the person dies. This may be paid in a | | | | |
| lump sum or in installments to the | | | | 3. |
| beneficiary [people named by the policyholder | | | | |