You must have heard the word insurance many times but have you wondered what does it actually mean? Insurance is basically an agreement or a contract that is represented by a policy. According to this policy, you are entitled to receiving financial protection or reimbursement against any loss through your insurance company.
How does insurance work?
To avail any insurance policy, you will need to pay a premium which is actually the amount that you need to pay to purchase a specific amount of insurance. It can be a monthly, quarterly or annually.
Factors to determine the amount of premium to be paid:
There are a number of factors that decide the amount of premium. The idea is to check the eligibility of an insured individual for the specific type of insurance policy that he/she wants to get.
Types of policies:
- Car Insurance
- There are many options to choose from for car insurance in Pakistan. This type of insurance policy protects you from financial loss against accidents and car theft and breakdowns.
- Health Insurance
Like car insurance, there are many types of health insurance in Pakistan. If you are healthy and do not have a history of getting medical treatment for chronic diseases, you are likely to pay less for health insurance or life insurance policy than someone suffering from chronic diseases.
- Travel insurance in Pakistan is on the rise with increasing cross-border travel policies being issued by different countries. A lot of countries in the west have made travel insurance mandatory for all visitors. Getting travel insurance for your traveling is a wise decision as it keeps you safe from a lot of hassle likely to occur during travel like loss of baggage, health issues during travel etc.
- General insurance in Pakistan is very common these days. There are many kinds of general insurance policies being offered by different companies.
- Group health insurance in Pakistan is also very popular under which companies get their employees insured.
- More types include building insurance, commercial asset insurance and many more.
In short, when you buy insurance policy, you pay premium to the insurer. If you make a claim your insurer will pay out for the loss that is covered under the policy that your bought. If in case you don’t make a claim, the insurance company will not give your premium back to you. It is instead it is pooled with the premiums of other policyholders who have taken out insurance with the same insurance company
