What is insurance and insurance product?

To study and research any subject, as a rule, begin with general concepts. Therefore, to begin with, you should deal with them.

What is insurance?

This concept means any combination of actions and relationships that are aimed at protecting the property rights and legitimate interests of individuals in the event of any adverse circumstances falling under the cases stipulated by the agreement, from the funds of funds formed from contributions from citizens.

In other words, insurance is a system of measures aimed at protecting material interests, which is regulated by law.

Who is the insurer and policyholder?

An organization that provides such services is called an insurer. As such, only a legal entity with special permission and a license to carry out relevant activities can act. It is independent, but to a certain extent, is under state control. It should also be stable and financially reliable.

A person entering into a relationship with a company in order to conclude a contract to protect against risks is referred to as the policyholder. Both the company and the individual are the subjects of these relations and parties to the contract.

What do companies offer customers?

During the conclusion of the contract between the company and the citizen, certain relations arise. This is the insurance product. A citizen assumes the obligation to pay contributions, and the company - to pay insurance.

Insurance is called material benefit expressed in cash or in kind, which is allocated from the insurance fund in the implementation of targeted activities. It can be obtained by any citizen who has entered into an agreement upon the occurrence of a certain case in order to compensate for their damage.

Bank insurance products have a distinctive feature, which consists in the fact that they can be realized or, on the contrary, not realized and not give material embodiment if the insured event does not occur. Products are sold directly by the insurer.

A stable and real fund of the insurer is a good base for any product. An insurance fund is the treasury of an insurance company, which is a financial guarantor of various kinds of payments and compensations when such an obligation is imposed on it.

Kinds

Speaking figuratively, let's imagine that an insurance product is a core covered by a shell. In turn, the core is a material filler that can be realized. Thus, the types of insurance products exist as follows:

1. Preventive measures - measures to prevent the occurrence of risks.
2. Monetary form - direct payment.
3. In-kind - means payment for services from the funds of the insurer.

It is worth mentioning that the latter form is also monetary, but it carries a specific goal. That is, the insured person is paid for the service, and he receives its result, but does not pay anything on his own. Such a sale of insurance products is very beneficial to both parties.

In other words, in the first option, upon the occurrence of an insured event, a person receives a payment in his hands and pays everything himself, and in the second - an insurance company does it for him.

That is why there is another classification of products, which reflects the same essence:

1. Commodity form - services.
2. Non-commodity - cash payment.

Insurance product - what is in the shell?

Now let's talk about the shell. In other words, this is what surrounds and protects the insurance product in terms of payments and is a provocateur of their appearance, just like the shell protects the core.

The product shell includes:

1. Circumstances causing the material core to stand out.
2. Conditions that help determine the amount of funds for insurance claims.
3. Conditions affecting the rights, duties and responsibilities of the parties to the contract.

What is included in the shell and core?

The shell and core are combined, including different types of activities:

1. Activities related to the creation of an insurance fund, increasing volumes, stabilization, as well as maintaining the financial base.
2. Activities to isolate the core product (its materialization in the event of an insured event).
3. Activities related to the spending of allocated funds in the form of payment or payment of services for an insured event.

An insurance company product is not in itself an abstract unit. It is unique and designed specifically for each policyholder and for their requests. In addition, a contract must be concluded for each product by correlation with various objects of insurance (life, property and others) or insurance risks (emergency). Moreover, the insurance amount, tariff, terms and conditions of insurance premiums are included in the contract.