Meaning of Insurance

Let’s look at the authoritative definition: Insurance (insur) originally referred to steady and reliable safeguard and then extended to a kind of safeguard mechanism, which is a tool used to plan financial affairs in life, a basic measure of risk management under market-oriented economy, and an important pillar in the financial and social security system.

There are some special points in the definition.

Firstly, insurance is a tool, an instrument for financial management. Simply, it is a method of increasing income or reducing expense, which itself is not inherently good or bad or right or wrong.

Secondly, its most important function is risk management. When something unexpected happens and just causes financial loss, insurance will give you some financial compensation at this moment, for it is inherently against human nature.

Lastly, insurance is a part of financial system. In other words, the development of this industry is managed and regulated by the state.

Remember the following points for suitable and cost-effective insurance:

Firstly, control the budget for insurance premiums and no more than 10% of family income is best.

Secondly, insurance allocation should give priority to the family breadwinner.

Thirdly, pay attention to the comparison of the price of each category of insurance products for the stakes are high.