Written by : Amish Aggarwal on 15-Dec-15. Basically, it means many people paying a little money to create a bigger pool of money so that anyone who is unfortunate enough to suffer a loss is reimbursed financially for that loss. This is a wrong concept. 5. Objective . It pays part of your income if you become ill or injured and need Accident Insurance After studying this topic the learners would be able to know about the different types of Accidental insurance policies and their distinct features and First, insurance is designed to make a loss whole. Disability Insurance Disability insurance, also known as disability income insurance, is another type of medical coverage. notion of insurable risks and insurable interest. Lesson 1 - Concept of Insurance Insurance is form of contract or an arrangement where one party agrees in return for a consideration to pay an agreed amount of money to another party to make good the loss, damage or injury to something of value in which the insured has an interest. Its primary objective is to provide protection against physical damage resulting from traffic collisions and against liability that could also arise there-from. (For more insight on the concept of risk, see Determining Risk And The Risk Pyramid.) Insurance is a mechanism that helps to reduce such adverse consequences through pooling, spreading and sharing of risk. Typically in indemnity insurance, the provider bills the insurer her usual fee for the 2. Utmost good faith All insurance contracts are subject to the principle of utmost good faith. Insurance is defined as the equitable transfer of risk of loss from one entity to another, in exchange for a premium. INSURANCE CONCEPTS 8. 1. INTEXT QUESTIONS 2.1 1. Thus life insurance business is complimentary to the Government efforts in social management. You will need to compare costs and benefits before choosing a plan. An insurance contract […] One cannot expect more than what one has insured himself. Insurance 1. The insured must truthfully inform the underwriter of every material fact that may influence the insurer in accepting, rating or declining a risk. We have seen many people neglecting insurance. Let's take the example of driving a car. This chapter examines the characteristics of insurance contracts. The main reason for this is the lack of insurance knowledge or bad experience in the past. It defines the . Elaborate the type of expenses that are covered under Health Insurance Classroom teaching, PPT’s 5. 2. While the details of any insurance policy can be complex, it's relatively easy to explain the concept of insurance.The concept of insurance involves a transfer of risk from one party, such as an individual or company buying an insurance policy, to another, such as an insurance company. about risk when thinking about insurance is the type of risk, the effect of that risk, the cost of the risk and what you can do to mitigate the risk. Nature of contract: ADVERTISEMENTS: Nature of contract is a fundamental principle of insurance contract. Introduction to the concept of insurance. Most common example of insurance. Motor insurance (also known as vehicle / car / auto insurance) is insurance purchased for cars, trucks, and other road vehicles. This duty of disclosure continues throughout the life of the policy. insurance plan or a “one-size-fits-all” policy. 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