Les Schlais @ Wordpress

Les Schlais works for an insurance marketing organization. Insurance is an interesting field with its own set of laws, expectations, and functions. Insurance is a form of risk management that effectively transfers the cost of a specific loss to another institution. Fundamentally, insurance works by a company agreeing in a binding contract to cover costs in the case of a certain event in exchange for regular compensation commonly referred to as a “premium”.

Insurance policies are useful because they allow businesses, individuals, and others to protect themselves against large financial losses by paying a regular, affordable amount. The reason that insurance policies are usually only created around events that have high potential cost is because it would not be financially beneficial to pay a monthly premium to protect against small losses.

A good example of an effective insurance policy is life insurance. Many go under the protection of a life insurance policy in order to financially provide for loved ones in the event of their death. A good candidate for a life insurance policy would be a primary “breadwinner” of the home. If the head of a family is the sole source of income, their death would create a sudden and considerable financial loss, especially if you include the costs of funeral arrangements.

Without the benefit of a life insurance policy, it would be very difficult for a family to recover financially from the sudden loss in income. However, a life insurance policy ensures that with only low monthly premium payments, in the event of your death, your income becomes replaced by the policy insurance amount. This helps to provide a financial buffer for the family in order to aid in the recovery process.

Insurance works as a business premise because of what is called “risk pooling”. Risk pooling refers to a large group of people coming together to insure against a large loss. Fundamentally, an insurance company pools the resources of thousands of people through premiums that want protection against large losses. Because the insurance company receives funds from such a large pool, they can use statistical analysis to calculate actual losses, and operate with profitability. This is possible because often the risks that insurance policies cover is relatively low, but are extremely costly when they do occur.

Insurance works because life is full of risks. With the help of insurance policies, some of these risks can be mitigated. When looking for insurance, it is important to calculate the risk, the cost, and the benefit. An analysis of coverage cost and payout is a fundamental part of creating an insurance policy.

Insurance agents like Les Schlais work hard to ensure that every person is educated about the best policy for them.

Source(s): http://www.investopedia.com/university/insurance/insurance2.asp

Originally published at lesschlais.wordpress.com.