Why we Need of Insurance?

What is Insurance?
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Ideally, insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a reasonable fee.
A contract in which one party agrees to pay for another party's financial loss resulting from a specified event (for example, a collision, theft, or storm damage). Lease agreements generally require that you maintain vehicle collision and comprehensive insurance as well as liability insurance for bodily injury and property damage.
In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. It lets you protect yourself against everyday risks to your health, home and financial situation.
A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (called a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions in a contract.
An insurance policy that provides financial assistance to support medical, personal, and social services that meet the basic daily living needs of the chronically ill or disabled over a long period of time.

There are many different types of insurance:
Insurance is a guarantee against financial loss. Insurance policies can be bought for all sorts of things. The most common kinds of insurance include life, health and property. You are unlikely to need every single one of these, so read around.

Life insurance: A means of providing for your dependents should you die early, but also a way to save cash through endowment policies or simila
Car insurance: Most people know something about motor insurance. This is because any vehicle driven on public roads must have a certain level of insurance. The Road Traffic Act ensures that drivers must meet liabilities they incur should they injure other people or cause damage in an accident.
Travel: Holidays can be dangerous occasions - especially abroad. If someone falls ill it is much more difficult than it would be at home to cope with the situation. Medical treatment is expensive.
Household contents and building insurance: Contents insurance covers the contents of a home such as furniture, carpets, clothes, television, refrigerators, jewellery and so on. Buildings insurance protects against damage to the actual structure of the home and to its fixtures and fittings. Contents and buildings policies can be bought separately or together in one package.
Critical illness insurance: This allows you to insure your income/ health were you to become too ill to work later on in life, and protects any dependents/ loved ones from the financial consequences of such unexpected events.

Do you need insurance?
If you insure yourself against every eventuality, it will probably cost more than you earn. Plan carefully and only take out what you really believe you will need.

General Principles
Other principles apply to all kinds of insurance.
1. Insurance can provide compensation only for the actual value of property. It cannot cover the loss of sentimental value, for example.
2. There must be a large number of similar risks so that the likelihood of a claim can be spread among other policyholders. It must be possible for insurers to calculate the chance of loss so that a premium can be set which matches the risk.
3.Losses must not be deliberate and not inevitable. Clearly, you could not buy fire insurance for a house which was already burning nor life insurance for someone on his or her deathbed.

Insurable Interest
Insurable interest is a fundamental principle of insurance. It means that the person wishing to take out insurance must be legally entitled to insure the article, or the event, or the life.

What is Insurance Fraud?
Fraud occurs when someone knowingly lies to obtain some benefit or advantage to which they are not otherwise entitled or someone knowingly denies some benefit that is due and to which someone is entitled. Depending on the specific issues involved, an alleged wrongful act may be handled as an administrative action by the Department or the Fraud Division may handle it as a criminal matter.

For more information on Insurance visit our http://www.halfvalue.com and http://www.halfvalue.co.uk websites.