Insurance (Aids to Trade) | Jamb Commerce

Meaning of Insurance

1. Definition of Insurance: A contract between an individual or entity and an insurer, where the insurer provides financial protection or compensation in exchange for regular premium payments.
2. Purpose of Insurance: To protect individuals and businesses from financial loss by providing a safety net in case of unexpected events or risks.
3. Risk Management: Insurance helps manage financial risks by spreading the impact of a loss across many policyholders.
4. Indemnity: Insurance aims to restore the insured to the same financial position they were in before a loss, without providing profit.
5. Policyholder: The person or entity that purchases an insurance policy and is entitled to its benefits.
6. Insurer: The company or organization that provides insurance coverage and assumes the risk.
7. Premium: The amount paid periodically by the policyholder to the insurer to maintain coverage.
8. Claims: Requests made by policyholders to the insurance company for compensation after a covered loss.
9. Underwriting: The process by which the insurer evaluates the risks of insuring a person or asset and determines the premium to be charged.
10. Coverage: The specific risks or events that are protected under an insurance policy.
11. Policy: The formal contract outlining the terms and conditions of the insurance coverage.
12. Beneficiary: The person or entity designated to receive the insurance benefits in case of a claim.
13. Actuarial Science: The use of statistical data to calculate insurance risks and set appropriate premiums.
14. Risk Pooling: The process of pooling premiums from multiple policyholders to cover the losses of a few, making insurance affordable for everyone.
15. Moral Hazard: The risk that the behavior of the insured party may change after obtaining insurance, leading to higher risk exposure.
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Types of Insurance

16. Life Insurance: Provides financial protection to beneficiaries in case of the policyholder’s death.
17. Health Insurance: Covers medical expenses and healthcare costs for the policyholder.
18. Auto Insurance: Provides coverage for damage to vehicles, injury, or liability in case of accidents.
19. Homeowners Insurance: Covers damage to or loss of property in case of fire, theft, or natural disasters.
20. Property Insurance: Protects against damage or loss of physical property due to unforeseen events.
21. Travel Insurance: Covers risks related to travel, including medical emergencies, trip cancellations, or lost luggage.
22. Liability Insurance: Protects against legal claims for damages or injury caused to others by the insured.
23. Business Insurance: Offers coverage to businesses against risks such as property damage, legal liabilities, and employee-related risks.
24. Disability Insurance: Provides income replacement if the policyholder is unable to work due to illness or injury.
25. Pet Insurance: Covers veterinary expenses for pets, including medical treatment and surgery.
26. Crop Insurance: Provides financial protection to farmers against crop damage or loss due to natural disasters or pests.
27. Marine Insurance: Covers risks related to ships, cargo, and voyages, protecting against losses at sea.
28. Flood Insurance: Specifically covers damage to property caused by flooding.
29. Workers' Compensation Insurance: Provides compensation for workers injured on the job, covering medical expenses and lost wages.
30. Critical Illness Insurance: Pays a lump sum if the policyholder is diagnosed with a serious illness like cancer, stroke, or heart disease.
31. Long-Term Care Insurance: Covers the cost of long-term care services, such as nursing home or home health care, for elderly individuals.
32. Unemployment Insurance: Provides temporary financial assistance to individuals who have lost their job through no fault of their own.
33. Term Life Insurance: A type of life insurance that provides coverage for a specific term or period, usually at lower premiums.
34. Whole Life Insurance: A permanent life insurance policy that provides coverage for the insured’s lifetime with an investment component.
35. Endowment Insurance: Combines life insurance with a savings plan, paying a lump sum after a set period or on death.
36. Burial Insurance: Provides coverage to pay for funeral expenses after the policyholder's death.
37. Private Health Insurance: Insurance purchased individually or through an employer, offering more comprehensive coverage than public health plans.
38. Group Health Insurance: A health plan offered by an employer or other group, typically covering multiple individuals under one policy.
39. Dental Insurance: Provides coverage for dental care, including preventive, diagnostic, and emergency treatments.
40. Vision Insurance: Covers expenses related to eye care, including glasses, contact lenses, and eye exams.
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Principles of Insurance

41. Principle of Utmost Good Faith: Both parties (the insurer and the insured) must act honestly and disclose all relevant information during the insurance process.
42. Principle of Insurable Interest: The policyholder must have a legitimate financial interest in the property or person being insured.
43. Principle of Indemnity: Insurance should only restore the policyholder to the same financial position they were in before the loss, without profit.
44. Principle of Subrogation: Once the insurer compensates the insured, they have the right to seek recovery from third parties responsible for the loss.
45. Principle of Contribution: If the insured holds multiple policies for the same risk, the insurers share the liability for the claim.
46. Principle of Proximate Cause: The cause of the loss must be closely related to the event covered under the insurance policy.
47. Principle of Loss Minimization: The policyholder is expected to take reasonable steps to prevent further loss or damage after an event.
48. Principle of Equity: Insurance policies should be fair and equitable for all parties involved.
49. Principle of Causality: The insurance policy must cover events that are directly related to the loss, excluding those beyond the policy’s scope.
50. Principle of Risk Pooling: The spreading of risks across a large group of policyholders to minimize the impact on individuals.
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Terms of Insurance

51. Premium: The regular payment made by the policyholder to the insurer for coverage.
52. Deductible: The amount the policyholder must pay out-of-pocket before the insurer covers a claim.
53. Policyholder: The individual or entity who holds an insurance policy and is entitled to its benefits.
54. Beneficiary: The person or entity designated to receive the policy's benefits in case of a claim.
55. Claim: A formal request made by the policyholder to the insurer for compensation after a covered loss.
56. Exclusions: Specific conditions or risks that are not covered by an insurance policy.
57. Coverage Limit: The maximum amount an insurance policy will pay out for a covered loss.
58. Underwriting: The process of assessing the risk and determining the premium for a policyholder.
59. Reinstatement: The restoration of a lapsed insurance policy after the policyholder has paid the due premium.
60. Riders: Additional provisions or modifications to an insurance policy that alter its terms or coverage.
61. Waiting Period: The period between the start of coverage and when certain benefits or claims can be accessed.
62. Grace Period: A period after the premium due date during which a policyholder can pay without losing coverage.
63. Renewal: The process of continuing the insurance policy for another term, often with adjustments in premium or coverage.
64. Lapse: The termination of an insurance policy due to non-payment of premiums.
65. Excess: Another term for the deductible, the amount the insured must pay before receiving compensation.
66. Insured Amount: The total sum that the insurer is liable to pay in case of a covered loss.
67. Nominee: A person designated by the policyholder to receive the policy's benefits upon their death.
68. Grace Period: A period of time after the premium due date during which the policyholder can pay and avoid policy cancellation.
69. Maturity Benefit: The sum payable to the policyholder if the policy is not claimed before the policy term ends.
70. Risk Factor: The level of risk assessed by the insurer, affecting the premium amount.
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Importance of Insurance

71. Financial Security: Insurance provides financial protection against unforeseen events, reducing the financial burden on the insured.
72. Risk Mitigation: Insurance helps spread the risk, making it more manageable for individuals and businesses.
73. Peace of Mind: Knowing that one is protected from significant financial loss gives peace of mind to policyholders.
74. Protection Against Loss: Insurance protects individuals, families, and businesses from losses related to health, accidents, property damage, and more.
75. Economic Stability: By distributing risks, insurance contributes to economic stability and resilience during disasters or crises.
76. Encourages Savings: Certain types of insurance policies, like endowment policies, encourage individuals to save while providing coverage.
77. Promotes Risk-Taking: Insurance allows businesses to take risks (e.g., investments, expansion) by providing a safety net against potential losses.
78. Employment Opportunities: The insurance industry itself creates millions of jobs worldwide, contributing to the economy.
79. Protection for Businesses: Insurance protects businesses from risks like property damage, legal liabilities, and employee-related incidents.
80. Social Welfare: Insurance schemes, like health insurance and workers’ compensation, contribute to the social welfare system.
81. Supports Economic Growth: By mitigating risk, insurance allows businesses and individuals to invest, grow, and innovate without fear of losing everything.
82. Fulfills Legal Requirements: Certain types of insurance (e.g., auto insurance, workers’ compensation) are legally required in many jurisdictions.
83. Promotes Financial Responsibility: Insurance encourages individuals and businesses to take proactive steps toward securing their financial future.
84. Support for Families: Life insurance ensures that families are financially supported in case of the breadwinner's untimely death.
85. Health and Well-being: Health insurance facilitates access to medical care, promoting better overall health and well-being for individuals and families.
86. Retirement Planning: Insurance policies like pension plans help individuals plan for a secure retirement.
87. Boosts Investment Confidence: With insurance, individuals and businesses can invest in high-risk ventures with reduced concerns about catastrophic losses.
88. Disaster Recovery: Insurance plays a critical role in helping communities and businesses recover after natural disasters or significant losses.
89. Prevents Financial Ruin: Insurance helps prevent individuals or businesses from facing financial ruin due to unexpected major expenses.
90. Ensures Continuity: Insurance ensures that business operations can continue despite setbacks, keeping the economy functioning smoothly.
91. Assists in Rebuilding: Following loss or damage, insurance provides the necessary funds to rebuild homes, infrastructure, and businesses.
92. Helps Manage Healthcare Costs: Health insurance provides a buffer against the high cost of medical treatment and medications.
93. Retains Customer Trust: Businesses with insurance are more likely to retain customer trust, as they can demonstrate reliability and responsibility.
94. Risk Diversification: Insurance helps diversify the financial risks across a larger group, reducing the individual burden of significant losses.
95. Contribution to Development: Insurance contributes to the development of infrastructure by providing financial security for investors and builders.
96. Encourages Entrepreneurial Ventures: Entrepreneurs are more likely to start businesses with the safety net of insurance protection against risks.
97. Aids in Asset Protection: Insurance safeguards valuable assets like property, cars, and personal items from damage, theft, or destruction.
98. Assistance in Legal Matters: Liability insurance protects businesses from the financial consequences of lawsuits and legal claims.
99. Promotes Accountability: The requirement to have insurance often promotes a sense of responsibility among individuals and businesses.
100. Encourages Personal Responsibility: With the safety net of insurance, individuals are encouraged to act responsibly, whether it’s maintaining their health or protecting their property.

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