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Insurance: How it works

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The bank manager heard their worries and nodded her head.  She had seen so many people loose everything when a disaster comes to them. 

“Do you know anything about Insurance?”, asked the Bank Manager.

“Innnss…. No, we don’t know what that is” replied Jonah as he and Edna sat up and were ready to hear what the Bank Manager said.

“Well, the word “Insurance” comes the old French word called “ensure”. “En” means with, and “sure” means safe. “ So basically, it’s a way to safeguard what you have.  That means, in case something happens to things you consider to be very precious, there is some way of protecting and compensating yourself and your loved ones.

He also explained to them that an insurance is a type of investment.  Of the 3 categories of investment (Cash, Investment by Loaning Money and Investment by Owing something), this falls under the investment by loaning money.  You “lend” money to the Insurance company, with the understanding that if something should happen and you need help, they could pay you several times this amount.

Edna and Jonah nodded, this seemed like just the thing they were looking for.

The Bank Manager showed them how it worked.

Edna and Jonah nodded, this seemed like just the thing they were looking for.

The Bank Manager showed them how it worked.

  • Decide what you want to protect or Insure. You can insure absolutely anything from your home, car, life to even your toys. 
 
  • Once you decide what you want to ensure, you need to figure out what the replacement costs are. It’s always a good idea to do research and find current costs. Think of other expenses as well that may come about.  For example, if something happened to Edna’s chickens, she could buy new chickens but in the mean time she would not have any eggs to sell, so she would loose money.
  • Then you need to shop around for the best deal. Here are the parts of the insurance that you need to compare.
  • Pay the Insurance company regular amount called a premium and agree on a term.
  • If your property gets damaged make a claim.

>> Continue to Parts of an Insurance 

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