Insurance is a financial institution classified as non-bank financial institutions. History tells us that in 1800BC, the Babylonian code of Hammurabi contains provisions that have an element of insurance on the laws that govern their trade.
Going by definition, we learn that insurance means the situation where one person or to protect themselves against risk and reduce the effects of uncertainty and share losses. Another explanation for this owes to the circumstances in which certain amount of money when collected from a person through an insurance company agreed to pay compensation or provide services to people that if and when people who experience certain types of damages on the insurance agreement, and the explanation, this is in Where an insurance company comes into play because they are the ones who will enter into agreements with those who take an insurance policy for all his belongings. This industry has been widely believed to be a way in which people reduce the risk of unforeseen circumstances. As a financial intermediary, they act as intermediaries between surplus units and deficit units thus maintaining economic growth in general.
Someone might ask, How do insurance companies generate funds used in providing compensation to those policyholders affected when any accident? The answer to this question, will lead us in discussion about the various ways through which the insurance companies get their money and how their policy holders are compensated. Fact that the funds they collect from their policyholders (ie someone who has a contract with an insurance company) invested in the form of premiums and the money invested in bonds, stocks, mortgages and government securities. They generate income for yourself and the people in their service. They invest money in their policy holders better business that has a maximum result of short-term investments and from there according to their needs when necessary in the claim and loss.
Among other functions, the primary function of insurance companies that are subject to risks, individual financial losses wisely distributed among the people, for example, in case of fire, fire insurance policy holders pay premiums into a common pool, from which those who suffer losses are compensated .
Overall, we hope that all this will give a better insight to get what you want at a good step to take when you take your insurance policy. But, always make sure that you do not do anything without first of all consult your insurance broker (who will take more time to tell you a policy-one that would be perfect for you) before going to the insurance companies know already that the cost of insurance is less than what would be the cost of insurance because insurance costs for employers for example, be forwarded to the consumer along with other product costs and benefits of the insurance consumers through reduced prices.