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Today, in almost any business, you may be faced with the need to have insurance. For example, car owners and drivers need or will benefit from CASCO and OSAGO, and when applying for a loan at a bank, they offer to insure the collateral, issue life insurance policies or in case of loss of work and health. Even in investments, you can use endowment insurance programs. However, due to the low level of financial literacy, not everyone knows what it is, how insurance is useful and when it is required.

Insurance and Insurance

In general, the term “insurance” means a set of items, a set of measures and actions, a list of rules that should protect health, life, property in certain circumstances (most often critical) from negative consequences. So, for example, climber’s insurance protects him from injuries and accidents during climbing. Medical insurance provides medical services, equipment and medicines for the treatment of diseases and injuries, their prevention.

Insurance is a comprehensive term that can be applied in any field of activity. However, its use is artificially limited. So, it is more often used in the physical sense, denoting some items designed to ensure safety and protection. For example, a circus acrobat’s lounge is insurance, an installer’s belt for high-altitude work is also insurance.

When it comes to the protection of interests associated with the receipt of funds, the term “insurance” is more often used. It is defined as a relationship (economic, financial) in which:

• in certain circumstances, one of the parties (the insured) receives cash payments, i.e., its financial interests are protected;
• their source is the funds created by the second party (the insurer);
• replenishment of these funds is made at the expense of the insured’s contributions.

Thus, in the general case, the insurance scheme is as follows.

1. The policyholder and the insurer enter into an insurance contract. Often, the policyholder receives a supporting document (not necessarily in paper form), which is called an insurance policy. That is why “concluding an insurance contract” and “purchasing a policy” are used as synonyms. The contract specifies:
   • Circumstances under which the insured is entitled to benefits. They are called insured risk and insured event.
   • The amount that the insured will receive in the event of an insured event. For it, the term “insurance amount” is used.
   • The amount of insurance premiums that the insured pays at a time or regularly during the entire period of the contract to form the insurance fund. It is from this fund that payments are made.
2. The insured transfers the amount of the contribution to the insurer, which the latter directs to the insurance fund.
3. Under the circumstances specified in the contract, the representatives of the insurer conduct an examination confirming the occurrence of an insured event. If the conclusion is positive, the policyholder receives the insurance amount in full or part of it.
4. If the insured event does not occur before the end of the contract, no payments are made.

Attention! Most insurance activities require the insurer to have a license. Issued by the Bank of Russia. On its official website, you can check if it is in the company with which the contract is concluded. This is relevant today, as scammers use the legend of the insurance business to collect funds from users.

Main types of insurance

In insurance activity, there are four main areas:

• personal insurance;
• property insurance;
• liability Insurance;
• financial risk insurance.

Personal insurance

Personal insurance includes all insurance options that are directly related to the personality of the insurer. This includes:

• life insurance, including accumulative;
• accident insurance;
• insurance against various types of diseases (often insurance companies offer policies for individual diseases or their groups, such as cancer);
• medical insurance – both mandatory with obtaining a compulsory medical insurance policy, and voluntary;
• child insurance, etc.

On a note! As a rule, it is the types of personal insurance that banks offer to borrowers when applying for loans. This includes life insurance, disability insurance, accident insurance, etc.

Property insurance is designed to protect real estate, cars and other property belonging to the insurer from loss or damage in the event of:

• fire;
• natural disaster;
• military action;
• actions of intruders, etc.

 For private clients, there are only single products of this direction. These include, for example, title insurance in real estate transactions. If such a transaction for one reason or another is found to be illegal and the buyer loses ownership of the object, he will receive monetary compensation from the insurance company.