Indian Insurance Education Center
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Insurance (Life & Non-Life)
What is Insurance?
Insurance is sharing of one man's risk among many people. For ex. In one village there are 500 houses. Each house is valued Rs. 10,000. Every year, on an average 5 houses get burnt, resulting into a loss of 5 * Rs. 10000 = Rs. 50000. In order to tackle this risk cooperatively, each householder contributes Rs. 100 and creates a common fund of 500 * Rs. 100 = Rs. 50000. Thus the risk is shared by 500 people although 495 of them did not suffer any loss.
In different stages of life, people look for 3 'S' :-
- Security
- Savings
- Stability
Insurance covers risks which are uncertain and it provides compensation for financial losses, arising out of uncertain risks.
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