Insurance: Preparation Means Protection

Nowadays, insurance has become a very important piece in the functioning society, we will tell you why it should be a priority.

Insurance is designed to help us minimize economic problems in the future. It works by signing a contract, called a policy, which can be for life insurance, damage or any other, in which you agree to pay a premium. This guarantees the payment of the insurance company in the event that some circumstance occurs in which you are insured.

Social security, which is in charge of protecting and providing welfare to the population, for example by guaranteeing an economic benefit at the time of retirement, disability, death or unemployment.

And on the other hand, there is private insurance, such as pension plan, which, as its name implies, is created by private institutions, which are in charge of protecting their policyholders in exchange for a payment, known as premium, in the language of the sector.

We know that in life we could be facing plenty situations in which having insurance is the key, either covering, economic, personal, or some other things. Every day we are subjected to some potential harm or damage and, we have to assume the economic impact that represents to repair or settle the damage suffered. Therefore, one of the best ways to cover eventualities is by taking out insurance.

So, what is an Insurance?

Insurance is an agreement that a person makes with an insurance agency/company that in case of suffering any damages, the person of entity it is covered in the insurance contract.

The insured, in exchange for the coverage offered by the insurance company, pays a certain amount of money to the insurer, which is called a premium.

Insurance is designed to help us minimize economic problems in the future, it works by signing a contract, called a policy, which can be for life insurance, damage or any other, in which you agree to pay a premium. This guarantees the payment of the insurance company in the event that some circumstance occurs in which you are insured.

This contract also specifies who the insurer is, which will always be the insurer and who is responsible in the event of a claim. The contracting party, who is the owner of the insurance policy and is responsible for paying the corresponding premium. The insured, who is the insured person, which can also be a property, and his beneficiary, who is the person who will receive the indemnity in case of loss. To better understand the role of each of the participants, we give the following example:

A company (contracting party) pays a life insurance policy to its employee (insured) so that his or her children (beneficiaries) may receive the benefits in the event of his or her death.

Sometimes a person can play more than one role, for example, he/she can be the contracting party, the insured and even the beneficiary.

The insured receives a contract detailing the conditions and circumstances under which he/she will be covered.
The cost of the insurance, which as mentioned before is the premium, depends on the risk that is covered and the probability of its occurrence.
There are some insurances such as the car liability insurance and the insurance of a mortgaged home, which are mandatory by law, so they must be purchased.