Insurance overview

What is it?

In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. It lets you protect yourself against everyday risks to your health, home and financial situation.

There are many different types of insurance:

You are unlikely to need every single one of these, so read around, choose carefully and remember to read the small print.

• Travel: Holidays can be dangerous occasions - especially abroad. If someone falls ill it is much more difficult than it would be at home to cope with the situation. Medical treatment is expensive. More here.
• Household contents and building insurance: Contents insurance covers the contents of a home such as furniture, carpets, clothes, television, refrigerators, jewellery and so on. In other words, what you would take with you if you moved. Buildings insurance protects against damage to the actual structure of the home and to its fixtures and fittings. Contents and buildings policies can be bought separately or together in one package. More here.
• Car insurance: Most people know something about motor insurance. This is because any vehicle driven on public roads must have a certain level of insurance. The Road Traffic Act ensures that drivers must meet liabilities they incur should they injure other people or cause damage in an accident. More here.
• Life insurance: A means of providing for your dependents should you die early, but also a way to save cash through endowment policies or similar.
• Private medical insurance: This covers the costs of private medical treatment for curable short-term illness or injury. It means that should you become ill you could be treated immediately privately rather than being put on an NHS waiting list. More here.
• Critical illness insurance: This allows you to insure your income/ health were you to become too ill to work later on in life, and protects any dependents/ loved ones from the financial consequences of such unexpected events. More here.
• Accident, sickness and unemployment cover: According to Moneyextra: "In 1999, 30,000 properties were re-possessed by mortgage lenders... Many lost their homes because they could no longer afford to pay their mortgage payments through an accident, sickness or unemployment." If you are planning on buying a house it may be sensible to think about getting some mortgage payment protection insurance.
• Pet insurance: This basically helps you foot the vet's bills if your pet gets poorly. By paying regularly into an insurance policy it means you have paid for the bill gradually rather than having to find the money for a steep bill when you can least afford it. More here.

What is Insurance?

I’m Gwen Outen with the VOA Special English Economics Report.

Insurance is a guarantee against financial loss. Insurance policies can be bought for all sorts of things. The most common kinds of insurance include life, health and property.

For example, an insurance company will pay to repair or replace the property if it is damaged or stolen. How much a company will pay in the event of a claim depends on how much insurance the policyholder has bought. The amount may also depend on the conditions that led to the damage.

The Insurance Information Institute says Americans paid forty-nine thousand million dollars for homeowners insurance in two thousand three. The payments that policyholders make to an insurance company are called premiums. Premiums for car insurance totaled sixty-five thousand million.

Insurance is an ancient idea. Early forms of insurance were used over three thousand years ago in Babylonia, the country that is now Iraq. Also, the Phoenician, Greek and Roman cultures had forms of insurance in case of loss or death. By the fourteen hundreds, the European shipping trade had developed its own system of insurance.

There are two main kinds of insurance companies. Insurance carriers provide insurance to individuals, groups and businesses. Re-insurance companies help reduce the financial risk to carriers. These are insurance companies for insurance companies.

Carriers usually sell their policies through insurance agencies or brokers. Brokers bring together buyers and sellers. Large businesses often use brokers when choosing products to insure their workers, property and interests against risk.

Independent sales agents sell insurance from many companies. Others sales agents sell insurance from only one company.

Over two million Americans work in the insurance industry. A government report shows that more than ninety percent of insurance-related businesses employ fewer than twenty workers. Yet, as of three years ago, just a few large companies employed almost forty percent of all the workers in the industry.

Employment experts say job growth in the insurance industry is slower than in other industries. They say technology has increased productivity, which means fewer workers are needed to do the work.

Source: http://www.voanews.com/specialenglish/archive/2005-03/a-2005-03-11-2-1.cfm