ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The policyholder pays a certain amount called ‘premium’ to the insurance company against which the latter provides insurance cover. The insurer assures that it shall cover the policyholder’s losses subject to certain terms and conditions. Premium payment decides the assured sum for insurance coverage or ‘policy limit’.

Detailed explanation-2: -Risk in insurance terms In insurance terms, risk is the chance something harmful or unexpected could happen. This might involve the loss, theft, or damage of valuable property and belongings, or it may involve someone being injured.

Detailed explanation-3: -A deductible is the amount of money that you are responsible for paying toward an insured loss. When a disaster strikes your home or you have a car accident, the deductible is subtracted, or “deducted, ” from what your insurance pays toward a claim.