How Insurance Works
Risk plus Statistics equals Peace of Mind
Protect your car, your home and your business.
Protect your family and protect yourself.
Life involves risk, and as consumers, we pay the premiums for someone else to bear the risk in the event something unexpected happens. Insurance is a form of collectivism by means of which people collectively pool their risk. Insurance companies have studied the statistics and have created a plan to cover the risks in daily life. By estimating the overall risk of expenses, a financial structure (premiums) is developed ensuring that money is available to pay for the losses specified in the insurance agreement. The benefits are administered by a central organization such as a government agency, private business, or non-profit entity.
Insurances are available for everything from homeowners insurance to life insurance. You never know when the unexpected might happen, leaving you with exorbitant bills and expenses. The size of a possible financial loss could be very substantial and could drastically affect your life. In the example of homeowners insurance, if something significant was to damage your home beyond the ability to reside in it, your life would take a turn for the worse. If you have a mortgage, the mortgage lender will insist upon you insuring that home incase of destruction. Insurance is your safeguard against substantial financial loss in the event the home was damaged or even destroyed.
When you are speaking with an insurance agent, they will ask some pointed questions in regards to the type of insurance you are requesting. The company the agent is working with will provide a premium amount based on the historical statistics. The premium you pay provides a safeguard against your losses by assuming the risk. The insurance companies use the payments of many to cover the losses of others.
Insurance companies were developed to take on your risks.
Disclaimer: This information is provided for information purposes. They are not intended to substitute informed professional advice. These responses should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. Please refer to your insurance policy for specific coverage and exclusion information.