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Whats is insurance policy ?


I'm going to talk next about the different types of insurance And first of all we need to talk about why is it even important to have insurance. Why do people spend a lot of their income purchasing insurance. Well first of all we know already about risk. 


We've talked about risk in terms of investments and that would mean there is a chance that you might not get the money you put it that you put in back out but with risk for insurance that's kind of a different type of risk. It's a risk that there is going to be a loss of income or loss of money or loss of property due to something that you can't entirely control. So whether that's whether. Getting fired or laid off having an accident. All of those are things that are out of your control for the most part.



So we have to manage our risk by having emergency savings first of all which of course is at least six months of expenses set aside. But also we can manage risk with insurance. And insurance allows us to transfer risk from the individual. So from us to the insurance organization so it transfers risk from us the chance of something happening that we have to pay for a lot of money sometimes from us to the insurance organization. 

What are examples of unexpected events tha may result in a financial loss?

So examples of unexpected events that may result in a financial loss could be why I've already said some but also if you had a fire start in your apartment. If you got into a car wreck. So those are more examples of things that because of them you would have some sort of financial burden to bear.

Whats is insurance policy ? 

we have some vocabulary here and our first one is policy And a policy is what you sign saying you understand it's a contract that states exactly what is covered

*Policy -A contarect that specifies what riks are covered And how much will be paid for any losses.So the policy is basically an explanation of what your insurance is going to cover for you or what your insurance will pay for if something happens to you .

*Coverage - The risks covered and amount of money paid for losses under an insurance policy.
So when I say coverage that just indicates that's on your whether it's something that's on your policy that specifically states how much your insurance will pay specifically for certain damages. So if you see Allstate commercials they talk about having better coverage. Maybe it means that it will cover more types of accidents than any comparable auto insurance company or maybe it will cover damages that are caused by you and not just somebody else. So coverage specifically what kind of losses the insurance policy will take care of for you will pay for.

*Policyholder - Person who owns the policy. 
The policyholder you're the person who owns that certain policy And premium premium is one of the hardest vocab words for students to remember in this class but premium is like your monthly payment just to have insurance.So premium is the amount you pay just to have insurance. So sometimes it's paid monthly sometimes like with car insurance it's paid every six months. But either way premium  Is what you pay. Every time whether it's monthly or six months just to have insurance.

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