What is an insurer? Why do we need insurance? Here we explain the functions and usefulness of insurers.
The insurer offers the insured a guarantee contract that will cover him/her against financial risks that could occur following an unforeseen event. The principle of operation is to mutualize the insureds who pay contributions to protect themselves. It is these payments that allow the payment of the expenses due by one of the contributing members in the event of a claim. It is the principle of solidarity that is the basis of the functioning of the insurance system.
Insurer and dematerialization
Like banks, insurers are moving towards dematerialization. You can thus subscribe online with an insurer or a brokerage company. The professionals of the insurance market generally offer online services on their website or via a dedicated application.
What types of insurance are available?
Insurances are classified in two categories, those that are related to the person and those that focus on damages. We distinguish between personal insurance and damage insurance.
An insurance company can offer different types of personal insurance:
- “in case of life”, with the payment of an annuity or a capital sum to the insured during his lifetime (life insurance);
- “in case of death”, with the payment of an annuity or a capital sum to the beneficiaries (death or funeral insurance);
- Supplementary health insurance and associated insurance (supplementary hospitalization insurance);
- Coverage of other risks (dependence, incapacity, disability);
An insurance company can also market damage insurance:
- Third party insurance, to cover damage caused to others (civil liability);
- Property insurance against accidents, fire or theft (car, home…); Business interruption insurance.
Setting possible goals is essential in financial planning, as many end up setting unattainable goals, which can lead to failure in their financial stability.
After Step 1, you have learned the importance of planning yourself, meaning you already know how to look at your budget and understand how you can improve your spending.
At this point, it is also important that you find a way to adapt building a financial reserve.
This can be done with the money left over after fixed expenses or you can give up some expenses and redirect it to your savings.
For example, if you have a cable TV package and don’t watch all the available channels, how about switching to a cheaper package? If you never watch TV, why are you paying for a TV subscription (plus the box rental?)
Allocate a small percentage of your income each month to a financial request so you can buy a house, for example, and get rid of the rent.