This article begins with a definition of what insurance is. This term implies a specific type of economic relationship that provides insurance coverage to organizations or individuals from dangers of various kinds. This article will discuss the functions of insurance, its goals and types.
Essence
As you know, any type of economic relationship carries certain risks, because there is always the opportunity to lose your finances. So, it is precisely the possible danger that is included in the concept of “risk”.
From an economic point of view, the risk can be called the future probability of an event with negative results. It is the unfavorable outcome of the risk that is expressed through damage. Many companies, organizations try to obtain compensation in case of risk factors if adverse conditions nevertheless have occurred.
We can conclude that the essence of insurance is to create insurance funds that exist at the expense of contributions of participants in the insurance company. If an accident occurs, the insurance agency will pay a certain amount of money to the injured party.
The main functions of insurance
Insurance activity, as a rule, does not create anything new. It exists due to the distribution of funds contributed by participants in the insurance company.
First of all, insurance performs a distribution function and pays material compensation in the event of negative risk conditions. It is the distribution function that ensures the continuity process at all stages of insurance.
The risk function is able to provide material protection against various negative random events that lead to material losses. Each insurance participant makes certain contributions that will not be returned to him after the end of the current contract.
Insurance also has a preventative function. Its implementation is carried out by reducing the degree of risk and the bad consequences of any insurance event. This function will be carried out thanks to the financing of funds in the funds of measures to prevent, limit and localize the bad consequences of accidents, catastrophes or accidents. In order to be able to implement this function, it is necessary to create a special insurance fund.
Insurance also has a savings function. This suggests that participants in the insurance fund will have the opportunity to save the amount of survival through insurance. This type of saving was caused by the need to protect family wealth already achieved.
The investment function enables insurance participants, if there are free amounts, to invest them in the fund of the insurance organization and make a profit from the activities of this company.
Insurance also has a credit function. We are talking about the repayment of insurance premiums.
The control function consists in the formation of the right fund and in the targeted use of funds received in it.
Insurance purpose
The main purpose of insurance is to protect the persons forming the insurance fund. The more people the company was able to attract, the more capital it had. So, the purpose of insurance is to satisfy the public need for high-quality and reliable insurance protection against all kinds of negative accidents.
Considering the macroeconomic position of insurance, its purpose can also be called the accumulation of funds that were paid by participants in the insurance fund, as well as the investment of these funds in the economy. A correctly chosen insurance goal will be able to determine its effectiveness. To quantify, you can use the coverage of insurance coverage of customers exposed to risks, as well as the provided insurance level for each of these risks.
Compulsory insurance
The purpose of compulsory insurance is to provide compensation for damage that has been caused during the transport of property and the health of passengers. It does not matter what kind of transport and type of transportation were used. In this case, uniform insurance conditions have been created for all customers, as well as a condition for the payment of funds to victims.
Compulsory insurance exists on the basis of the guarantee of compensation for damage received during transportation by any means of transport. All insurance payments are made at the expense of insurance compensation or at the expense of compensations established by the law of the Russian Federation. At the same time, the size of the damage caused and the method of compensation are determined regardless of which transport was used.
Social insurance
The main objective of social insurance is financial support for those categories of insured persons who, due to certain circumstances, have lost their ability to work.
Therefore, there are such goals of social insurance:
- ensuring the payment of temporary benefits to the disabled category of the population;
- payment of funds to disabled people due to certain types of diseases;
- payment of patrimonial certificates;
- providing cash payments to mothers who care for young children;
- financial support providing preferential treatment during spa treatment;
- payment of material benefits at the birth of the baby;
- also social assistance to persons with disabilities in the acquisition of prosthetic structures, rehabilitation equipment and invalid equipment.
The objectives of compulsory social insurance are determined by the state. This is done to help a disabled group of people.
There is a breakdown of expenses for compulsory social insurance. This document must be completed by persons who want to receive social insurance from the state. If you belong to the disabled category of population, then the state will definitely help you.
Health insurance
This type of insurance is the main form of public protection in protecting health.
Health insurance is a combination of several types of insurance that provide full or partial payments to insured people for various medical services.
The main goal of medical insurance is to guarantee citizens the right to health care in cases of illness, at the expense of the funds accumulated by the fund.
Pension type of insurance
Pension insurance is the material support of citizens upon reaching retirement age. This type of insurance can be of two types: state and non-state.
The first of them is fully guaranteed by the state, and the order of receipt passes full legal control, and the second can be concluded in a wide variety of options, taking into account all the nuances.
The goals of pension insurance are to ensure that people of advanced age have a decent standard of living. Ideally, the difference in receiving funds during working hours and retirement should not be very noticeable.
Insurance principles
Like any other type of activity, insurance has its own principles. So, the principle of equivalence is very important, which should be to maintain a balance between the costs and income of the insurance company. Of course, risks can threaten a lot of people, but in fact, not all of them lead to an insured event.
Insurance payments for each case will be made only at the expense of contributions of other members of this organization, who were able to avoid insurance risk.
The principle of randomness is also inherent in insurance. This suggests that only those events that are inherent in the sign of probability and chance can be insured.
Insurance Objectives
The purpose and objectives of insurance include the activities of the insurance organization itself. The main tasks will be the mandatory presence of certain factors, namely:
- providing social protection to the insured segments of the population, as well as the mandatory implementation of all payments specified in the contract;
- participation in supporting the financial stability of the health care system;
- protection of interests related to the preservation of property of legal entities and individuals.
For the correct implementation of all the goals and objectives, each insurance company is controlled by state bodies.
The main types of insurance
As mentioned above, the purpose of insurance is to protect persons participating in the creation of an insurance fund. At the same time, the goal remains unchanged with any insurance method.
Consider what types of insurance exist:
- Personal . In this case, the insurance object is personal interests related to health, life, working ability and pension provision. This includes life insurance, accidents and medical insurance.
- Property . In this case, we are talking about the existence of property interests related to the use and possession of a certain property. This includes insurance against fires, natural disasters, as well as property damage.
- Liability insurance . Here, the insurance object will be considered liability to other citizens or organizations. This type of insurance will provide reliable protection against potential harm to health or property belonging to other citizens or organizations.
- Entrepreneurial risks . An object is considered to be property interests that are associated with compensation for losses or non-received income when conducting business. These include deposit insurance, non-payment risk, financial guarantees, export loans.
conclusions
In order to succeed in any type of activity, you need to consider what risks may accompany you. The right insurance company will provide you with reliable protection.