Historical Background of Insurance

Insurance has existed since the evolution of society, with a rich history behind it. In ancient times, merchants used to take loans with the understanding that they would repay if their ships reached their destination safely. There were chances of a ship sinking or risk from pirates. Most of the businesses were affected a lot by not completing their shipments. To address this issue, a third party has to be there to fulfill the loss if any. 

The new business was developed to make the merchants comfortable while shipping and became famous as insurance. In insurance, what merchants had to do was that they had to deposit charges against their ships to the insurance company. Insurance company had to take complete responsibility of any loss that occurred during the voyage. Now the question arises of how the insurance company earns its profits. The question is valid and the answer is more interesting as compared to the question. It is not necessary that each time the ship will face any loss, there are rare chances of any loss during the voyage. Insurance company charges the merchants on every voyage. 

What is Insurance

It is a financial arrangement in which an insurer protects itself from potential losses from an insurance company. In return, the insurer deposits charges according to the company’s terms. Insurance company bears the losses of that individual or business entity. 

This is a two-way process of give and take between the insurance company and beneficiary of the services. The beneficiary deposits charges to gain benefits over potential loss and the insurance company earns good profits when there are no losses. Insurance company take their decision wisely by keeping all the circumstances in view. They do a thorough evaluation of each case before proceeding.

Types of Insurance

As for the types of insurance are concerned, there are several. Insurance is a service-based business, not a product business. It is not limited to its specific product line but offers its services to various sectors. 

Life Insurance

The top-notch and the famous insurance service of the current time. Life insurance provides financial benefits to the beneficiaries in case of the policyholder’s death. In life insurance, the one who signs the agreement and deposits a series of payments doesn’t get the benefits, but his family. Life insurance is categorized into a broader spectrum like:

Term Life Insurance

• It provides coverage in a fixed period span, i.e. 10 years, 20 years, etc
• The beneficiary can get the death benefit if he policy holder dies within the time frame of the policy
• If the policy holder doesn’t meet the end in the given time frame of the  insurance policy, there will be no payout
• It is more affordable

Whole Life Insurance

• It provides lifetime coverage
• It is more expensive
• Here exists the concept of cash value that grows over time

Universal Life Insurance

• It is a more flexible insurance in which the premium and coverages can be adjusted over time
• Interest earned can be used or withdrawn

Endowment Life Insurance

• It pays a lump sum over a specific period or upon death
• It is widely used as a savings tool

Health Insurance

Health insurance is trendy nowadays. We receive several cold calls from various companies regarding health insurance. In health insurance, we avail medical expenses, hospitalization, and other health care benefits. It is divided into further categories as follows:

Individual Health Insurance

• It covers individual health benefits

Family Health Insurance

• It is expanded over to the whole family

Group Health Insurance

• When an employer gives health insurance to its employees

Critical Illness Insurance

• Health insurance can be availed only in critical or major diseases

Property Insurance

This insurance deals with damages of homes, assets, buildings, and businesses. 

• Home insurance includes damages caused by theft, fire, or other natural disasters
• Commercial property insurance includes loss of the business’ property, assets, or other appliances

Auto Insurance

All the vehicles related insurance come under this umbrella. Any damage to the vehicles caused by theft, accident, etc, is dealt with in Auto Insurance. It includes the following:

• Comprehensive Auto Insurance
• Third-Party Liability Insurance
• Collision Insurance

Insurance is an important financial tool which protects against risks caused by various factors. It helps safeguard life savings, business damages and health benefits. It is a two-way value exchange system for the company and the policy holders. You can do your business transactions to their maximum without any risk involved in the processes. 

The insurance business has created a lot of potential benefits against potential losses. Gone are the days when businesses used to hesitate while sending their ships to the long routes of wide oceans. Insurance has safeguarded a lot of financial risks that come across any walk of life. It depends upon you how you can benefit from this prestigious service.