What Is Insurance?

What Is Insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.

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Insurance

Understanding How Insurance Works

There is a multitude of different types of insurance policies available, and virtually any individual or business can find an insurance company willing to insure them—for a price. The most common types of personal insurance policies are auto, health, homeowners, and life. Most individuals in the United States have at least one of these types of insurance, and car insurance is required by law.

Businesses require special types of insurance policies that insure against specific types of risks faced by a particular business. For example, a fast food restaurant needs a policy that covers damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not subject to this type of risk but does require coverage for damage or injury that could occur during test drives.

There are also insurance policies available for very specific needs, such as kidnap and ransom (K&R), medical malpractice, and professional liability insurance, also known as errors and omissions insurance.

Insurance Policy Components

When choosing a policy, it is important to understand how insurance works.

[Important: Three crucial components of insurance policies are the premium, policy limit, and deductible.]

A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs.

Premium

A policy's premium is its price, typically expressed as a monthly cost. The premium is determined by the insurer based on your or your business's risk profile, which may include creditworthiness. For example, if you own several expensive automobiles and have a history of reckless driving, you will likely pay more for an auto policy than someone with a single mid-range sedan and a perfect driving record. However, different insurers may charge different premiums for similar policies. So finding the price that is right for you requires some legwork.

Policy Limit

The policy limit is the maximum amount an insurer will pay under a policy for a covered loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum. 

Typically, higher limits carry higher premiums. For a general life insurance policy, the maximum amount the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured.

Deductible

The deductible is a specific amount the policy-holder must pay out-of-pocket before the insurer pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims. Deductibles can apply per-policy or per-claim depending on the insurer and the type of policy. Policies with very high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims.

Special Considerations

With regard to health insurance, people who have chronic health issues or need regular medical attention should look for policies with lower deductibles. Though the annual premium is higher than a comparable policy with a higher deductible, less expensive access to medical care throughout the year may be worth the trade-off.

Key Takeaways

• Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies and/or perils. 
• There many types of insurance policies. Life, health, homeowners, and auto are the most common forms of insurance.
• The components that make up most insurance policies are the deductible, policy limit, and premium.

DIOS HACE MILAGROS

Abrir el mar Rojo para que el pueblo de Israel lo atravesara en seco y alimentar con “maná que caía del cielo” a un numeroso pueblo en el desierto, son algunos de los milagros atribuidos a Dios en la Biblia que suelen recordarse con facilidad por su espectacularidad.

Esos están descritos en el Antiguo Testamento del libro sagrado del cristianismo, mientras que del Nuevo, entre muchos otros, se habla de la transformación del agua en vino por parte de Jesucristo, hijo de Dios, en una fiesta de bodas, la resucitación de Lázaro luego de cuatro día de muerto, y la del mismo Jesús. Pero ¿qué hace Dios hoy? ¿Aún existen los milagros?

La respuesta es evidente para los cristianos y creyentes, y se trata de un rotundo “sí”. Dios sigue haciendo milagros todos los días y los hace tan trascendentales como los menciona la Biblia.

Yo misma los experimenté seis años atrás, cuando me desahuciaron en tres hospitales del país y Estados Unidos por una enfermedad de la médula ósea por la que me auguraron, en última instancia, dos semanas de vida.

Dios escuchó mi súplica, la de mi familia y allegados, cambiando ese pronóstico solo por su amor y misericordia. No tengo la menor duda de que lo hizo Dios.

Sin embargo, aun existen dudas y negación por parte de los que no creen en Dios. ¿A qué se debe? A la falta de fe.
¿Cómo puede una persona experimentar el favor de Dios si no cree que él lo pueda hacer?

Dios está dispuesto a obrar en su situación, pero si no cree, será muy difícil que algo sobrenatural suceda por intervención divina. Ni siquiera Jesús pudo hacer muchos milagros en su pueblo, Nazaret, porque la gente no creía en él (Marcos 6:5).

Aun así él nos anima y asegura que “todo cuanto pidamos con fe en la oración, lo recibiremos (Mateo 21: 21-22).

arlin

arlin