Insurance is a mechanism whereby an individual or business can receive protection against the loss of life or property by making a payment to a company that provides the protection or insurance.
When you are looking for insurance, your application will go to an employee of the company called an underwriter. They will review your application set your price or premium based on your risk to the company.
If you are approved, you will have insurance coverage. When there is an accident or event that prompts you to call your insurance company, your property or assets will be protected. When you file a claim, the insurance company will pay to fix or repair your property.
When you file a claim for damage you may have to pay a deductible. A deductible is a certain amount of money you must pay before the insurance company will pay you for damages to your property. If you have a car accident and the damages total $2,000, assuming your deductible is $500, you must pay your deductible in full before the insurance company will pay for the damages.
The insurer is the insurance company and the insured is you; the person who is covered by the insurance policy.
If you have a life insurance policy, the proceeds of the policy will be paid out to the beneficiary you list on the policy. Beneficiaries always receive the proceeds from such a policy.
When you have insurance coverage, you have to make monthly payments to the insurance company to make sure your coverage remains in force. Your payments are called premiums.
Melvin J. Richardson has been a freelance writer for two years with Associated Content, and writes about topics such as banking, credit and collections, goal setting, financial services, management, health and fitness. Richardson has worked for several banks and financial institutions and gained invaluable experience and knowledge. Richardson holds a Master of Business Administration in Executive Management from Ashland University in Ashland Ohio.