An insurance company provides risk protection for individuals and companies. You pay a regular fee (called a premium) for a policy that outlines the damage or loss you are insured against, and the damage and loss you are not insured against.. There are two kinds of insurance companies: life and general. The most popular forms of policies include health, life, automobile, home, property and liability. When damage or loss occurs, a claims adjuster determines if your policy will cover it.
Insurance companies take risks based on actuaries who use statistics and probability to determine overall exposures assumed on a policy. Once your company determines its risk, underwriters write a policy and calculate your premium. They also outline what is not insured. Premiums are collected from insured parties and invested. Insurance companies reserve money for claims they expect you to make.
Types of Life Insurance
There are two kinds of life insurance–term and whole. The Insurance Information Institute (III) describes how each product differs. Term insurance pays only if death occurs during your policy term, which is usually from one to 30 years. Whole life insurance pays a death benefit whenever you die, even if you live to 100. There are three types of whole life insurance–traditional whole life, universal life and variable universal life.
Types of General Insurance
All non-life insurance is sold by general insurance or property/casualty companies. III states that these companies cover policyholders’ damage or loss of property and legal liability for damages caused to other people or their property. This includes auto, homeowners and commercial insurance. It is important to remember that insurance regulations and rates vary from state to state, so do your research before purchasing any form of insurance.
Cheryl Thompson is currently a Ph.D. student in Communication Studies at McGill University. Her dissertation research is on the black hair care industry. She is a music, popular culture and film enthusiast and has published articles and reviews in the Canadian Theatre Review, Toronto Star, "Exclaim!" Magazine, and "Chart" Magazine.