Thursday, September 28, 2006

About Insurance

Insurance is a protective measure for valuable things in your life. It is a contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

The roots of insurance might be traced to Babylonia, where traders were encouraged to assume the risks of the caravan trade through loans that were repaid (with interest) only after the goods had arrived safely. The Phoenicians and the Greeks applied a similar system to their seaborne commerce. The Romans used burial clubs as a form of life insurance, providing funeral expenses for members and later payments to the survivors.

When shopping around for an insurance policy, look for the best priced package that is right for you - prices can vary from one insurance company to the next. And make sure you know what you want. Some individuals, for example, prefer 24-hour claims service or face-to-face contact with an insurance representative. Also consider the claims settlement process, the amount of the deductible and the extent of the replacement coverage. Insurance companies and the policies they offer are not all the same, so think about more than just the price.

Yaksha Question: What is the greatest mystery on earth? Yudhisthir answers, “Every one has to die. But no one thinks that for himself. This is the greatest mystery.”

In a broad economic sense, insurance transfers risk from individuals to a larger group, this is better able to pay for losses.

You are worth more than you think. The financial security for your family is important. Let’s determine your number of income-earning years from now until you retire. The following data is required to calculate your HLV (Human Life Value): Current age, retirement age, annual income and the expected increase, other benefits, monthly expenses on self and family, your assets and your liabilities.

Your first step towards financial planning should start with insurance. In India, it is easy to be misled because of lack of awareness. Most people associate insurance with investment which is a completely wrong notion.
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