topic 7 libf

Insurance is a payment 'just in case' something bad happens. We pay insurance companies because if someting bad does happen, it will cost lots of money to deal with it ourselves. A person buys an 'insurance policy' from a company that agrees to take on certain risks in return for a premium. Many types of company offer insurance. They all have to follow rules, train their staff and give customers accurate information. An 'insurance broker' can be paid a fee to find a good insurance product for a customer. Who provides insurance:

- Insurance companies

- Banks and building societies 

- Supermarkets

- Motoring organisations

Insurance companies take on many risks and have millions of customers. Every customer pays a premium, but not every customer has something bad happen. The insurer only pays out money for events that happen. It keeps all the other premiums.

Some insurance is compolsory: you must buy it if you use particular products. Car insurance is compulsory if you own a car. It is illegal to drive a car without insurance.

Other types of insurance are voluntary: it is up to you whether you buy them or not. Travel insurance is voluntary, but it is highly recommended. It covers people against loss of property while they are on holiday, and pays medical costs if they become ill. House insurance is important for people who own property, because the cost of damage is high. Buildings insurance covers damage to the house caused by events such as food or fire. Home contents insurance covers loss or damage to the contents of your home. For higher premium, you can also cover items that are taken outside the home, such as laptops. Pet insurance covers you against the cost of certain vet's bills. Bills are usually covered for an accident or a serious illness. Health insurance covers you for private health treatment if you have an injury or need an operation. If you have to go to hospital,you can choose the date of your operation instead of taking the dates offered by your local National Health Sevice (NHS) hospital.

'Insurance' and 'assurance' have slightly different meanings. 

- Insurance is for an event that might happen.

- Assurance is for an event that will happen the only such event being death.

Life assurance pays out a lump sum to the people left behind if you die. To take out life assurance on another person, you must have an 'insurable interest' in their life. The life of the person of the person being covered is the 'life assured' There are different types of life assurance. Whole-of-life assurance pays out an agreed sum whenever the life assured dies, as long as the premiums were paid. Term assurance pays out an agreed sum only if the life assured dies within a certain period of time. Otherwise, no sum is paid. Insurance premium tax (IPT) - All insurance premiums are taxed. Insurance companies add this amount to their customers' premiums, making them more expensive. The comany then passes IPT to the goverment.

Some insurance is voluntary, however people weigh up the cost of insuring against the risk of not insuring. For example travel insurance, if you had an accident in another country and were not insured, you might have to pay expensive costs. We insure voluntarily to protect what is ours, whether it is a car, a home, or an expensive item.

- THEFT most items can be stolen, such as by muggers on the street or by burglars from a home. For example, smartphones are easy to steal but costly to replace.

- ACCIDENTAL DAMAGE most itens can be broken. You might drop a tablet computer, or have an accident in your car.

Customers should remember some important principles when buying insurance. An insurance provider's price for premiums is based on assessing risk. It does this using the infomation you give, so the infomation must be accurate. A 'material fact' is something the i nsurance company should expct to be told. 'In good faith' means not keeping infomation from the insurer on purpose. 'Indemnity' means you can't make a profit out of insurance. You can only be put back in the same position you were in before the event happend.

When you choose to buy insurance, it is a good idea to shop around. Price comparison websites let you compare sme insurance deals on offer. You enter your details and get a list of deals to choose from.