The simplest way of defining insurance is that it is a means of security against the future occurrence of an uncertain event. Insurance can be divided into two major categories. That is life insurance and general insurance. These insurance services are provided by the insurance companies. There are very many insurance companies in Canada. The Canadian population provides a ready market for the insurance services provided by the various insurance companies from insurdinary.ca that operate in Canada. Even though there are many insurance companies in Canada, at least they share certain characteristics. The following are the most important characteristics of insurance.
The first characteristic of insurance is risk sharing. The financial losses of an individual are shared among a pool of other policyholders. The event, however, must be specified. Example of such a loss may be the death of a breadwinner. Another important characteristic of insurance is the cooperative device. This is the coming together of a large number of persons who agree to share the financial losses due to a particular risk which is insured. These people are either brought together voluntarily or through publicity. Another way of bringing these people together is through solicitation of the agents.
Value of risk is the third characteristic of insurance. TheInsurdinary insurance companies evaluate the risks before determining the premiums to be paid by the policyholder. There are various ways of evaluating the risks involved. The high risks scenarios will result in a higher premium rate. The other trait of insurance is the payment at contingency. Payment, in this case, happens only when the contingency occurs. As in life insurance where death is guaranteed, it means that the payment is certain.
For insurance to work properly and smoothly, it is a necessity for a large number of people to be insured. This will facilitate a smooth and cheap spreading of a given loss. When the number of people is small, the loss will be still be covered, but the cost of insurance to each member may be quite higher. This makes it unmarketable. Another thing to note is that the amount of payment that is given to any loss incurred is equivalent to the loss incurred. In most cases, the insurance usually promises to pay a fixed sum to the happenings of an event.
There are some people who still think that insurance is some form of gambling. This is not true. Insurance is not gambling. Insurance eliminates worries that come with the possibility of an event occurring that may result in a financial loss. And finally, insurance also is not charity. To learn more about Canadian insurance, go to http://dictionary.cambridge.org/dictionary/british/insurance.