Pimer on Insurance

INSURANCE is a method of protecting against future loss. Through insurance,
the risk of such loss is transferred to an insurance company or other insuring
organization. In many forms, it is used to handle a wide range of financial
risks. Individuals and families,
groups of employees, self-employed persons, and business firms both large and
small buy insurance.

Why do people engage in the business of insurance and why do people buy
insurance?

Businessman thinks that it is wise idea to invest their money in an insurance
business. In a business oriented mind, they think that they can generate more
income through the premiums paid by the insured. However, in a service oriented
mind, they also think that they can help those who worry about their life,
health and properties whether real or personal. At any rate, the two mentioned
purpose can be achieved simultaneously in an insurance business.

How insurance business works?

Suppose 100 people buy 100 brand new cars. Thinking that at any time it could be
stolen or destroyed in a collision, they decided to insure them for their
protection. According to past statistics, an average of 1 out of 100 cars
insured is stolen or destroyed each year. By charging for example $300 each of
the 100 cars, the company will accumulate $30,000, that amount will be enough to
pay for the expected $15,000 loss. The $15,000 is enough to cover the company's
operating expenses, including sales
commissions, salaries, rent and other miscellaneous expenses for the
operation of the business.

In actual operation, the owner of the car pays the premium indicated in the
policy. In turn, the insurer pays the insured for the damage to his automobile
resulting from car accidents. It also covers lawsuits arising from the said
accident. Likewise, auto insurance can help pay the medical bills of those
injured by the accidents. The same procedure is observed in health insurance.
The policy holder pays the premium and in turn the insurer pays the insured the
costs of his medical treatment in case of illness. The insurer also replace some
of the income lost while the worker is disabled by accident or illness.

For inquiries email: walterdcvalerio@yahoo.com The author is an English Teacher of High School Department and currently pursuing his masters degree major in Language Teaching and presently working on developing www.englishsubject.net