What is Insurance?
Insurance is basically a risk management technique which is used as an act of insuring. The significance of risk can be calculated by multiplying the likelihood of risk with the severity of risk. You can do four things with risk. You can bear it, reduce it, share it or eliminate it. By getting linked with insurance one, you share your risk with the insurance provider. In business explanation insurance means the action of giving financial security for various different businesses against the premium that is paid in advance. The concept of insurance one has basically evolved due to the uncertain situations which a person or a business goes through its lifetime. Insurance one is basically planned to safeguard the monetary comfort of a person or a business against any unpredicted loss. In some countries there is a law to have some types of insurance mandatory and there are some optional insurance facilities as well. There are some pre-requisites which one should be clear of before taking the decision of insurance one.
Gauge your requirement
Before taking any decision at any time and part of a lifetime one should clearly know what his /her requirements are. In this world we see many people going on to purchase things which they themselves don’t need. Similarly before opting for the insurance one you should first do the need analysis of yourself. You should brainstorm that what are the things you want in the insurance and do you really need the insurance one or not. You should know that in terms of coverage what your requirement is. In some countries there are some obligatory requirements for the people to have certain minimum limit of insurance with them. So the people living in these countries should necessarily have that minimum amount of insurance one with them. Talking about those countries where there is no obligatory insurance requirement the people should do the need analysis of themselves on their own and then should take the cession of availing any insurance one facility or not.
You should know your purchasing power
Once you are sure about what is your requirement, the next thing which you should do is to calculate how much you can spend on the insurance. Because you have to pay some premium at the purchase of the insurance facility and after that when a loss occurs some amount is paid by the insurance provider and some amount is paid off by you. So you should calculate it before the purchase of insurance one facility that to how much extent you will be able to pay.
Mark your boundaries
The last thing before the purchasing of insurance one facility is to mark your boundaries. It is a very essential step to perform. You also have to set certain limit. Limit is the limited amount which will be paid by the insurance company for your loss. So if you pay high premium to the insurance one provider at first then this limit will be high and vice versa. If all the above steps are dealt with care one can have most appropriate insurance facility.
