insurance meaning and types – step by step guide to starting life insurance and its types BD

Insurance is the transformation of the justified risk at life, property or wealth in exchange for money. Through insurance meaning and types, the insurance company takes all the risk of the person. It is a part of risk management to avoid the undesired loss. Here we can use an example. Man moves always at risk. At any time he has to go to the doctor or hospital for treatment. Even sometimes it happens early death to them. Just like that Man has to go with an undesirable accident with a car, House, Business institutions, etc.

insurance meaning and types
insurance meaning and types (image)

At the time of this kind of sorrowful accident, the pre-plan is called Insurance plan. The insurance company cannot return the healthiness to a sick person or cannot return a guardian to a family. But an insurance company treats indirectly like a guardian by financial help. Just like that, it cannot return the lost property but plays an in an important role by returning money to re-construct or regain the wealth.

Insurance meaning and types of insurance:

  1. Term life insurance – This kind of insurance runs for a fixed time like 5,10,25 years. It is cheaper than permanent life insurance. This insurance can be used as the alternative to your lost potential income. It will help to fulfill the aim of your family. We can get some examples like you can relieve from the loan, you can continue your business, you can continue your educational expenses. But you have to keep in mind that though it is called the alternative of potential income, it gives you money for only one time. The benefit of term life insurance is that when your family becomes self-dependent, you need not spend money on the insurance unnecessarily.
  2. Whole life insurance – Whole life insurance is like permanent life insurance. This insurance has no fixed time or limited time. It more expensive than the term life insurance. Here, the insurance taker has to pay money to the insurance company to the whole life. After the death of the signed man, the family of the person will get the insurance money to use.

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Ability to make insurance (insurance meaning and types):

7 rules by the insurance company to be maintained.

  1. The probability of the existent of the same loses – As an insurance company gives the reparation, in reality, you have to have a lot of the same things. We can give an example here. ‘Loids of London’ is very famous for making insurance of the organs of the popular artist and players.
  2. Targeted damage – It means that there will be an agreement to give money for one or more than one fixed damage. Example: If you make only a fire insurance to your care, the company will not give you money for losing the care.
  3. Accidental loss – It means that the number of loss has to be out of control. If the accident is caused by carelessness, you may not get any money.
  4. Vast loss – The quantity of the loss should be as per the agreement with the insurance company.
  5. The endurance of the premium insurance – The loss may be vast but the premium insurance must be in control of the insurance taker.
  6. The quantity of the loss must be measurable – As all kinds of losses cannot be repaired and the insurance company bears the repairment with money, so, the loss has to be measured in money.
  7. Natural calamity – In the time of natural calamities like earthquake or flood, the quantity of the repairement will be less because this kind of loss cannot be repaired by any private company.

Some errors in the conception of life insurance and this is the reason to know insurance meaning and types:

  • I don’t need the life insurance:

    The term is true but the only truth is death. At the time of the death of the only earning person of a family, the falls in a great danger and uncertainty, there stops the wheel of life. Sometimes, due to extreme need of money, the study of the children becomes stopped, treatment and the marriage of the children become impossible. In term of life insurance, the insurance taker chooses one or more candidate to take the pre-planned money after his death. So, if the paper of life insurance is pursued, the financial loss can be lightly recovered.

  • The insurance company gives less interest than the bank:

    Without making an insurance if money is stored in Bank, the bank gives money in the fixed time to the loan owner or saver but does not take any risk. It is not appropriate to compare Bank with Insurance company always.

  • Buying of life insurance is the wastage of money: Buying a life insurance is an investment, not the wastage anymore. Buying a policy the insurance taker gets a demand for insurance to the company. The taker may meet the temporary financial problem.
  • I have so much money so I don’t need any insurance policy: It is a wrong idea because someday all can be damaged by any natural calamity.
  • There is no need to make any insurance in a lonely life: Some more errors are “I have a policy so I don’t need more of them”, “There is no need of the high moneyed insurance”.”Without buying the life insurance will invest my money in another source”. “In the time of my absence the nominee will not sure to be given the money”.

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