Wednesday , October 16 2019
Home / Insurance / Basics of Insurance

Basics of Insurance

Basics of Insurance

In present insurance concept is a very important and very popular thing among people in the society. Human beings, their properties and their family members are always exposed to different kinds of risks, hence People transfer their risks to insurance companies. Insurance is a tool which reduces the cost of losses. Also it accumulates funds to meet individual losses.

Insurance may be defined as a contract between two parties. One party called insurer undertakes in exchange for a fixed sum called premium to pay the other party called insured a fixed amount of money after happening of a certain event.

Insurance provides safety and security against on a particular risk such as life insurance provides financial security against old age sufferings and death. Further insurance provides peace of mind. It removes the fears, anxiety, tensions and future uncertainty. Insurance reduces business risks.

Also insurance gives lot of benefits to the society. Following things are some examples for it.

  • Life insurance encourages savings and it accelerates the economic growth of the country.
  • Insurance provides strong hand and mind, with protection against loss of property and capital to produce more wealth.
  • It helps to reduce inflation and it provides credit facilities.
  • Insurance increases business efficiency eliminating the loss of damage, disappearance of property of goods.
  • It helps to promote foreign trade providing protection again trade risk.

The main objective of every insurance contract is to give financial security and protection to the insured from any future uncertainties. Insured must never try to misuse this safe financial cover, because this is a contract between two parties. It depends on credibility of the both parties. An insurer must always investigate about any fraudulent insurance claim. It is also a duty of the insurer to accept and approve all genuine insurance claims. Sometimes insured are seeking profit opportunities by reporting false occurrences. It violates the terms and conditions of the insurance contract. Therefore insurer includes principles in the insurance contract. Insurance contract base on these principles. They are,

  • Principle of Utmost good faith
  • Principle of Insurable interest
  • Principle of Indemnity
  • Principle of Contribution
  • Principle of Subrogation
  • Principle of Proximate cause

These principles are identified under the principles of insurance law. Above all principles are applicable to general insurance contracts and only utmost good faith, insurable interest and proximate cause are applicable to life insurance contracts. These principles are necessary for clear interpretation of insurance contract. Also insurance has two main types. They are,


  • Life insurance
  • General Insurance
  • Motor insurance
  • Marine insurance
  • Fire and property insurance
  • Miscellaneous insurance

On the other hand insurance is a contract. It has basic elements of the contract. These elements are,


  • Offer & Acceptance
  • Consideration
  • Legal capacity to contract or competency
  • Consensus “ad idem”
  • Legality of object

Improve Your Health

  • How Green Tea affect to improve your Health

    This is the Health Knowledge Lankatricks provide you. Under the Health Calgary we try to discuss various area about improve your Health. This Post discuss about Green Tea and How it effect for your health.


  • Largest 5 moons in the solar system

    Largest 5 moons in the solar system Considering the Solar System, There are eight planets is in their. So, There are 193 moons in these eight planets. Some planets of them are as large as

  • The biggest interview mistakes to avoid

    This article is also a another guide about career advice. This guide discuss happening mistakes when people facing interview. By avoiding these mistakes you can face interview correctly.   The biggest interview mistakes to

  • Best Practices for Making CV, Cover Letter and Facing Interviews

    How to write a cover letter   Cover letter is a letter that you comprise with your job application or curriculum-vitae. It should be a single page letter and always you should attach cover letter

  • Software Engineering Basic Lesson

    Software Engineering In this we can learn basic concepts and theories about software Engineering in brief.This Lesson will help for Advanced level IT Subject and also People who like to Start learning Software Engineering.  

  • Tips for writing an outstanding cover letter

    Lankatricks provide you to many of tutorials related to finding a good jobs. In this post you are going to learn how to write an outstanding cover letter. This will help you to achieve a your

  • How to make Sri Lanka PayPal account receive money – Part 02

    Making Sri Lanka PayPal account. This is the second part of making PayPal account. This part you can continue the process of making PayPal  account for Sri lanka Peoples. At the end of this part

  • Six principles of insurance

    In this post shows the six principles of insurance and usage of that principles when dealing with the insurance contract. Every insurance contract gives financial protection and security to the person who buy the insurance and that

– The things we publish in this website are relating to the job information and information relating to the professional courses, which are extracted from various sources such as various newspaper advertisement,circulars and Various websites. The right of these information belongs to the first owner of the information. If any alteration happen these information, we don’t take the responsibility arising arising from such alteration. Instead, what we do is to inform you as quickly as possible regarding the information related to the job opportunities and model applications and professional courses. as well as we allow you to gain essential knowledge related knowledge related for the competitive exams.

Check Also

Auto Insurance Basic Introduction

In this post we are going to discuss about basic things of auto insurance. and …


Lankatricks Exam Help

error: You do not allow to Copy content or View source..!!