CONCEPT OF INSURANCE

 

Insurance is a captivating practice area which brings together practitioners in the various professions. These are mainly either in law, accountancy, or actuarial. From among all these professions, it is arguably the lawyers who have been at the center of the development of insurance. It has gained a great popularity over a period of time. Many professionals of different fields tried to establish their career in the field of insurance. Since, it has a wide scope in the education and working field, it is opted by many scholars. Insurance is a concept which mainly focuses on to cover the risks and dangers of a human being’s life. A human being’s life is full of uncertain events which led to the occurrence of many risk and dangers. Uncertainty is one of the important concepts of risk. It is uncertainty with respect to the result in a given situation. Uncertainty does not occur in the natural order of things but actually, there are a number of outcomes, which are uncertain. It means a person may or may not face certain situations in his life which are so uncertain that it causes a great threat to his life and liberty. From the very first moment we wake up in the morning, go for a drive or take public transport to reach to school or to work and until we get back to our homes (and perhaps even afterwards), we are near to danger of different degrees. Some people experience the premature and tragic death of a beloved family member, destruction of their property from both manmade and natural disasters. There are many other dangers in life which a person may face. So in order to protect a person from these uncertainties of his life or to save his life from any danger or loss, the concept of insurance comes up. It is necessary to study the concept of insurance in detail to understand the risk factors and saving techniques from such dangers and risk.

The study of insurance has been done and considered by many scholars and it is because of their efforts, this particular subject has now evolved a great importance in an individual’s life. Each and every human being wants to avoid such danger and risk which may cause him such a loss or damage which he cannot cure. Insurance is a commercial activity that helps to reduce the risk of loss. It is a contract of indemnity where the indemnifier called the insurer, agrees for consideration called the premium to indemnify the loss caused to the indemnified called the insured. It is made available in written form and the insurance deed is called policy. The period for which a policy is taken is usually known as “term of policy”. Insurance is a method by which individuals, families and organisations can be protected from financial loss that results from an unexpected or accidental happening. There are two basic types of insurance that is personal insurance and commercial insurance. The major lines of insurance are life, property and health. It is also defined as a method by which interested members of a society can band together and collect funds to pay losses suffered later by members of the group. The concept of insurance has developed throughout the world. There must be a certainty of loss with a certainty of no gain this is to be known as one of the most important factors of Insurance. This is interpreted to mean that the expense of the premium has become a certain loss while the no gain means that only as much as has been lost will be repaired, replaced or have its actual cash value paid. Therefore, one may lose but one may never gain from the insurance product.