Abc of Insurance

Part I: The ABC of Insurance

Insurance is a company that offers services to protect your assets, they are sometimes complex language which we all need to know to understand what we are hiring and use it as best as possible.

Here are the most common concepts that sometimes do not know and can complicate the use of a service as useful as insurance.

An insurance is a contract whereby an insurer undertakes, by charging a premium to compensate the damage caused to another person or property, or to satisfy a capital, income or other benefits agreed. All of the above depending on the type of insurance has been hired.

AGREEMENT AND POLICY

Contract of insurance

The insurance contract is the covenant or agreement between two or more people requires the fulfillment of certain actions, for example, offer a service or pay compensation.

Through the insurance contract insurers undertake to compensate for damage if an event specified in the contract, and you pay a premium to be protected.

POLICY

The document (contract) reflecting the general rules, particular or special.

PRIMA

The premium can be known as the cost of insurance, and this is linked to certain characteristics that determine how much insurance will cost. Depending on the amount you pay for your premium will be the coverage you will receive.

Insurance companies consider 5 things to determine the value of the premium:

Level of Risk: This refers to the number of times that has happened and suddenly some kind of damage that have been generated by it (eg how many earthquakes have occurred in Mexico in the history and damage).

Statistics: This refers to how often an accident happens and average severity (ie on average how many cars of any brand were stolen last month).

Probability: this means how likely an event happens (eg a hurricane in Acapulco is somewhat likely).

Mortality Table: Number of deaths by age, occupation and gender (eg a man working in a mine is more likely to have an accident, one who works in an office).

In the first part of ABC insurance, saw the terms of insurance policy and premium. These three concepts are fundamental for when purchasing an insurance policy and pay a signature bonus. Remember not to sign your policy if you do not understand perfectly the benefits and coverage you will receive from your insurance.

Do not miss the next part of the ABC of insurance, and we will talk over these issues.