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Types Of Insurance

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Insurance is a way of protection against potential financial loss resulting from some event or another. In simple terms, insurance is an investment tool used to protect your assets from the loss of said assets in case of some disaster or other unpredictable event. The way in which insurance works is by offering a predetermined amount of money to cover any loss that may occur. Insurance may be managed and funded by you, or it can be administered by an external agency.Do you want to learn more? Visit Insurance.

The manner in which premiums are paid and managed directly by the insurer, or some third party, or by the government, and/or managed and regulated by the insurers themselves are broadly classified into two main areas. In certain situations, either the insurer or an external agency may pay a premium for the policyholder. Premiums are generally based on the probability of loss by an absolute or relative degree. The risks that are faced by an individual would dictate the premium he or she would have to pay.

Some common types of premiums are known as “risk-premiums”, wherein the premiums are typically based on how much the insured is likely to lose in the event of an insured event. In this type of scenario, there is usually no ceiling on the premiums. Other common premiums are referred to as “benefits-premiums”, wherein the premium payments are typically proportional to the benefits the insured is guaranteed to receive during his life. Most commonly, benefits-premium premiums are paid in cases of accidental death, terminal illness, and annuities with fixed premiums over the lifetime of the annuity.

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