An insurance company protects individuals or businesses against financial losses related to theft of property, car accidents, medical expenses, storm and fire damage, and income loss due to death or disability, among other crises.
Identification
Insurance companies are corporations that offer protection policies to help people shield themselves against potential misfortunes. Some insurance companies offer only one kind of insurance, while others offer many different types. Some insurance companies actually only specialize in writing original, customized insurance policies for unusual insurance demands. No matter what type of company, however, all insurance corporations function in a fairly similar manner.
Types
Primary insurance companies offer several different types of insurance policies. Life insurance offers financial protection to its beneficiaries (normally dependent children and spouses) upon the death of the insured. Disability insurance offers a pre-specified amount of income to an insured person who can no longer work because of illness or injury. Health insurance pays expenses that occur because of illnesses and accidents. Property-casualty insurance protects against property loss or damage as a result of theft, fire and natural disasters. Liability insurance protects the insured from financial responsibility for damage to others' property and injuries of others.
Features
Insurance companies follow certain guidelines. They underwrite insurance policies for clients that involve paying a specified amount of money to these clients in the event of a client experiencing a loss of some kind. For example, a car insurance company underwrites insurance policies that state that the company will reimburse clients in the event that a client's car is stolen or damaged from an accident. The client, in exchange, agrees to provide recurring premium payments ("premium" is a word meaning payments made to an insurance company on a regular basis). The car insurance company collects premiums from all of its clients, invests this money into safe investments (such as U.S. government bonds) and keeps funds to pay for claims made by company clients.
Significance
Insurance companies are important because they insulate you from catastrophic events and losses in life. By having several people pay into a collective home insurance company, for example, one person can easily be protected from an accident that destroys his home. Insurance is also very important for businesses. The health care and trucking industries would not be able to exist without an insurance company to help spread costs and liability out evenly across engaged parties.
Size
According to the U.S. Bureau of Labor Statistics, insurance companies provided employment to 2.3 million people in 2008. Insurance carriers made up 61 percent of these jobs. Insurance brokerages, agencies and providers of other serves related to insurance comprised 39 percent of insurance jobs.
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