Personal Finance Tips

Insurance can be so confusing. You get so tired and bored reading the policy that when you get to the end you tend to skim over the last parts. One of the most important parts of the insurance policy is at the end though – the endorsements section. Here is why you should pay close attention to this section.

Most policies’ basic coverage forms end with a section called endorsements. Endorsements add to, take away or change provisions contained in your basic insurance policy form. Endorsements are typically one, two, or three pages long each.

One reason insurers use endorsements is to save money. If they have new provisions or have changed provisions in their policy, using an endorsement will allow them to save on re-printing costs. The insurance company simply adds an endorsement at the end of the policy to incorporate the new or changed provisions. So be to sure to check this section when you are purchasing insurance..

Endorsements are often used to restate a policy provision after a court decision interprets the provision in question in a different way than the insurer has been interpreting it. So you can see why you need to read this section carefully after you have finished looking at the basic policy.

Most commonly, endorsements add exclusions not stated in the basic insurance policy form. For example, in home owners insurance policies these often include such things as dog bites and home daycare services performed for a profit. Also typically flood and earthquakes are excluded from most home owners polices. Separate policies can be purchased elsewhere.

Knowing what the coverage is excluded by an insurance policy is very important, especially when comparing insurance policy quotes.

What is General Insurance?

Insurance policies can be divided largely into two categories: general insurance, and life insurance. The former, as you may have guessed, includes policies that cover all aspects of a person’s life and belongings. Car, medical, accident, travel – insurance for all these things is covered under General insurance.

What are the Benefits of General Insurance?

The aim of any insurance policy is twofold: reimburse you financially for any loss, and to give you peace of mind in case of a loss. For instance, the cost of any medical treatment can be prohibitively high. If you have a medical insurance policy, the company providing you with the policy has a liability to reimburse you partially for the cost of the treatment. This can often be more than 80% of the entire cost – a huge saving.

In some instances, insurance is mandatory. For example, you can’t drive a car in the US without owning an auto insurance policy.

What are the Common Types of General Insurance?

The most common type would be auto insurance, especially in the United States, where, as mentioned above, it is a necessity.

Health insurance is also very common across much of the developed world. In the United States, there is a big debate about extending it to all sections of the society – a practice that is prevalent throughout the Western world. This kind of insurance is especially beneficial as the cost of healthcare in developed countries is usually very high.

Home insurance is also very common and most homeowners have some sort of policy to cover their house in case of any damage. When you consider that the average cost of a house can run into several hundred thousand dollars, it becomes somewhat necessary to protect it against any kind of loss. Home insurance provides the perfect antidote, giving home owners peace of mind, as well as financial reimbursement in case of any damage covered under the policy.

Insurance brokers popularity had significantly increased in the last couple of years. Traditionally, if someone wanted to find the best insurance rate, they would have to approach multiple insurance companies, fill out various forms and then request rates from each company individually. Very often a structure of a product is very complex, and it could be very difficult to understand to an average customer differences in terminologies and coverage. This is where insurance brokers come in. They represent their clients. They work with a number of

Insurance companies and choose the policies that are best for their clients. Since they know insurance products inside out, they have the ability to consult the client and match him/her together with the product that is least expensive and has best coverage. Most often, brokers are commissioned sales people, who get reimbursed by insurance company. This means there are no upfront costs for the client.

Insurance brokers sell insurance policies ranging from life,car,disability and term insurance.

There are also some specialized policies that brokers sell. They include corporate, farm and crop insurance.

Insurance brokers often attend seminars to keep up to date on insurance regulations, products and laws.

Other duties of insurance brokers are:

- compare and explain products and providers
- help their clients calculate net worth
- build and maintain a client base
- maintain detailed client files
- help their clients identify goals and objectives
- make recommendations on how clients can achieve their goals and objectives
- help clients gather information from bank account records, income tax returns, life and disability records, pension plan information and wills.

Home or Medical insurance, the paper work and documentation are nerve-wrecking exercises, not just for people soliciting insurance policies, but also for insurance companies that prepare these policies. An insurance executive based in Philadelphia, spent six to seven hours at an average preparing documents for the company, leaving very little time for him to sell policies, for which the company actually hired him in the first place.

Another executive based in Milwaukee had to stay back two hours to complete the motor insurance documents of his clients. It was frustrating he said, to find everyone leaving the office when it closed, but he had little choice and had to stay back for completing the documents. Many executives work over-time to complete the documentary obligations, leaving them little time to spend on other important issues.

The Health Insurance documentation requires a lot of effort running into several pages, so also the auto insurance, business insurance, home insurance, and life insurance. The insurance claim documents mainly consists of checklists, crash reports, diagrams, forms, general reference notes, legal references, letters, maps, medical references and policy forms etc.

Many insurance companies now use online typing services; they hire offshore companies on the internet to provide documentation related to insurance claims. The insurance company executives use a digital voice recorder and record the dictations into them and through a USB cable transfer the recording to a computer, and through the email send the voice file to the off shore vendor for documenting the narrations. Some use the microphone on the computer for recording the dictations, instead of using a portable voice recorder.

This saves them valuable time from typing the documents themselves, besides saving them costs. The offshore companies most of which that are located in India provide the service at one third of the costs, because of the difference in time zones the insurance executives send the dictations to their Indian counterparts in the evening, just before closing time and the following morning the documents arrive into their email. The company executives are relieved now, no one stays back anymore to complete the insurance documentation, its all sent offshore.

Insurance is a defensive measure used against future conditional losses to hedge the possible risks of the future. It is a legal contract that protects a person from contingent risk of losses through financial means and provides a means for individuals and societies to handle some of the risks faced in daily life.

These contracts of insurance are called policies and are provided by insurance companies. The Insurance companies charge a regular amount from the customers, which is paid back, either in part, or entirety, to the customers in case of a definite loss. This regular amount charged from customers is called Insurance Premium.

REASONS OF INSURANCE:

Sometimes in life it is not possible to avoid the losses. For example People may become ill. They may die of illness or accidents or their homes or other property may undergo damage or theft. So in all these cases and they have to face the loss of income or savings. So insurance is a manner of financially insuring that if such an incident comes about then the loss does not affect the present well being of the person.

DOCTRINES OF INSURANCE:

1 There should be a certain definite loss taken place at a known time, in a known place and from a known cause. Therefore the time, place and the cause of loss should be clear enough.

2 The incident that represent the cause of the claim should be accidental or beyond the control of the beneficiary.

3 The size of the loss must be significant from the perspective of the insured. Insurance premiums should cover both the estimated cost of losses, plus the cost of policy, regulating the losses, and providing the principal required to logically assure that the insurer would be able to reimburse claims.

4 The amount of premium should be affordable.

5 The possibility of loss and the cost of compensation should be calculable or estimable

TYPES OF INSURANCE:

Below are some kinds of insurances.

LIFE INSURANCE:

Life insurance policy insures the life of the insured. The insurance company is legally bound to provide a monetary benefit to a decedent’s family or the beneficiary after the death of the policyholder. The proceeds are paid to the beneficiary either in a lump sum amount or an annuity

MEDICAL INSURANCE:

Medical insurance is also called medclaim. Under this policy the insurance policy pays the amount to the insured for his health purpose. This amount covers the cost of medical treatment.

DISABILITY INSURANCE:

There are two types of disability insurance.One is simple disability insurance and the other is total disability insurance. In case of simple disability insurance,a financial support on monthly basis is provided by the insurer to the policy holder if he is unable to work due to an injury or an illness. But permanent disability insurance provides the reimbursement if a person becomes permanently disabled.

GENERAL INSURANCE:

It includes automobiles insurance, business insurance, property insurance etc.

Automobile insurance:

In UK this insurance is called motor insurance. It compensates the loss or damage occurred to the vehicle. But in United States auto insurance policy is essential to legally operate a vehicle on public roads.

Business insurance:

Business insurance protects the businesses against risks of losses and damages and compensates in case of loss

Property insurance:

This type of insurance protects the property against the risks like fire, theft etc. This category also includes fire insurance, flood insurance, earthquake insurance etc

Fire Insurance:

It is an insurance covering the damage to the property caused by fire.

Flood Insurance:

This type of insurance pays the policy holder in case of any loss or damage to the property due to flood. It protects the property against the flooding.

Earthquake Insurance:

This insurance compensates any damage to the property caused by earthquake.

IMPORTANCE OF INSURANCE:

Insurance plays an important role in sharing the risks of people in an affordable form.It helps the people to quickly recover from damages and losses.