What is the purpose of property insurance
Insurance is based on the principle that a collective assumes the financial risks of the individual insured. In the event of an insured event, the insurers pay the respective damage or other benefits from their total income. The range of insurance companies is large and they can be classified as follows:
- Damage insurance: The companies bear the costs of damage, for example in the event of a fire.
- Liability risks: In the case of insurance such as private and professional liability, the service providers settle claims that an injured party makes on the policyholder.
- biometric risks: This area includes all life events such as death and occupational disability that endanger livelihood. This includes a long age, since without old-age provision there is a risk of old-age poverty.
- Insurance against costs: Health insurance and legal expenses insurance belong in this category. There does not have to be an immediate damage as is the case with damage insurance. Health insurances also pay for preventive treatments, for example.
Insurance for young professionals: We explain what you really need in the Billomat magazine.
The purpose: collective risk taking
The principle of an insurance protects against financial uncertainties. Insured persons transfer fixed insurance premiums to cover the respective risks. Example: someone takes out household insurance, a year later a fire destroys the entire inventory. The costs for the replacement could have overwhelmed the person concerned, thanks to the insurance he has avoided this situation. The same applies to health insurance, a serious illness can mean considerable costs. With insurance, the insured can ensure that they receive the necessary medical treatment. This collective risk assumption results in different concrete benefits. Anyone who takes out household insurance and does not record any damage will not receive any benefits. For others, the sums of damage clearly exceed the contributions paid.
The business basis of an insurance
Insurance companies use a variety of individual risk factors when calculating premiums. At the same time, the calculation is based on the assessment of the total costs. The personal contribution is determined on the basis of statistical estimates and actuarial mathematics. When it comes to life insurance, the following aspects are important:
- Age at contract conclusion
- State of health at this point in time
- potentially harmful behavior such as smoking or high-risk sports
- Risk of damage at work
A key difference lies in the question of whether insured persons have to take out a policy. Motor vehicle owners must have liability insurance, and companies must also take out various liability insurance policies. This state requirement is intended to ensure that victims receive the compensation they are entitled to. Otherwise there would be a risk of excessive financial demands on the perpetrator and consequent failure to settle the claim.
Statutory social insurance as a special case
In terms of insurance, the state social insurances such as statutory pension insurance, health insurance and unemployment insurance also deserve mention. They differ in the contribution calculation. The contributions depend on the level of income, employees and employers have to make appropriate payments. Factors such as age and state of health do not play a role. This principle of solidarity serves the social balance, even seriously ill people should, for example, be able to take out insurance for a reasonable amount.
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