What is Insurance: Definition, Benefits, and Types

Evan 26.1.2023 16:33

What is Deductible? Why Pay Deductible if Premium is Paid?

Sometimes when you make an insurance claim, the premium amount is less than what it should be. So, in that case, you first have to pay the remaining amount and then claim the insurance money. The extra amount to be paid under such circumstances is called ‘deductible’. You can pay lesser premiums and higher deductibles in an agreement with the insurer.

Features of Insurance Coverage
Insurance coverage has the below mentioned salient features:

It is a kind of risk management plan to use an insurance policy as a hedge against an uncertain loss
Insurance coverage does not mitigate the magnitude of loss one may face. It only assures that the loss is shared and distributed among multiple people
Various clients of an insurance company pool in their risks. Hence, they pay the premiums together. So when one or a few incur a financial loss, the claimed money is given out of this accumulated fund. This makes each client bear a nominal fee
Insurance coverage can be provided for medical expenses, vehicle damage, property loss/damage, etc. depending on the type of insurance
Premium, policy limit, and deductible are the main components of an insurance coverage policy. The policy buyer should check them thoroughly while buying an insurance policy