Answer to Question #155696 in Management for Prabhdeep

Question

Discuss in detail the steps in taking a purchase of insurance product? how the rating of insurance cover is decided ?(please answer in 200 to 250 words)

Answer 1

STEPS TAKEN WHEN PURCHASING INSURANCE PRODUCTS

Purchasing insurance products helps in achieving long term goals.

If you buy insurance, you are making a personal decision about your risk if things go wrong.

1. Make sure the person or firm offering the insurance is authorized to do so

Buying insurance requires some thought. Feel free to ask for help from a financial security advisor. Consult the Register of firms and individuals licensed to practice.

2. Determine how much and what type of insurance you need

The amount and type of insurance you choose will depend on both your needs and your financial means. The insurance premium should fit within your budget. Given the variety of insurance, you’re sure to find something that meets your needs.

4. Shop around for insurance that’s right for you

Prices can vary from one insurer to the next, for both premiums and contract features.

Deciding of rates

A rate is a price per unit of insurance for each exposure unit, a division of liability, or property with similar characteristics.

Rates for most insurance will be determined using a class rating or an individual rating. The individual rating includes judgment rating and merit rating. 

Separate ratings are used when many factors predict the losses, and those factors vary considerably among individuals. 

Judgment ratings used for determining potential losses are varied and cannot easily be quantified. Because of these factors, there are no statistics that can reliably assess the probability and quantity of future losses.