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One-minute guide to understanding an insurable risk

One-minute guide to understanding an insurable risk
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First Published: Sun, Jan 24 2010. 08 59 PM IST

Updated: Sun, Jan 24 2010. 08 59 PM IST
0-15 seconds
What am I?
I am like any other risk that can pose a threat to your life, assets or finances. What makes me different is that you can roughly estimate the financial worth of the damages that I may cause to your life or assets. That may not lessen the pain of the loss, but identifying me well in time can help you ensure a secure financial future for yourself or your dependants.
15-30 seconds
How do you identify me?
I have three basic qualities. First, I can be easily compensated for and am not mammoth in proportion. Second, though you can anticipate my arrival, you can’t predict it as I come without prior notice. So, it’s best to be prepared against me. Finally, I will cause you a definite loss that is financially measurable.
30-45 seconds
When can you expect me?
There could be innumerable instances when I can hit you. You run the risk of damaging your car and injuring yourself or even losing your life when overspeeding or driving drunk. You run the risk of having a heart problem if you don’t exercise regularly, but insist on having rich and fatty food. You run the risk of getting hit by a speeding vehicle while crossing a road. Your house can get damaged by an earthquake or even a riot. The list can go on.
45-60 seconds
How do you handle me?
Though you can never be sure when I will hit you, you should always be prepared to encounter me. If you are not prepared, I can easily cause long-term losses to you or your dependants. Insurance companies help you prepare against me. They compensate you for any financial loss that I may cause to you. What you need to do to get them in the picture is regularly pay them a small price to cover any future eventualities.
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First Published: Sun, Jan 24 2010. 08 59 PM IST