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What Is the Insurance Industry?

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  • Written By: Patrick Roland
  • Edited By: R. Halprin
  • Last Modified Date: 23 August 2014
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The insurance industry refers to a collection of companies that manage risk for individual health and property by promising to reimburse policyholders for losses in exchange for regular payments. The industry is divided into three distinct segments: life insurance, health insurance, and liability insurance. Each operates on similar principles, but protects policyholders for very different reasons. There are two main types of ownership in the insurance industry.

The life insurance industry specializes in two types of policies designed around the client's life. The most common type of life insurance policy is a guaranteed sum of money to be paid out to a beneficiary after the policyholder's death. The second, and less common, type of policy rewards a policyholder if they live past a specified age. In both cases, the policyholder pays a sum, i.e., a premium, to the insurance company at regular intervals to keep the policy active. If these payment are not made, the policy is voided and beneficiaries do not collect any money.

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Another kind of coverage that focuses on the well-being of a policyholder is health insurance. The primary function of the health insurance industry is to absorb some or all of the costs associated with health care. A health insurance policy covers an individual's treatment visits to doctors, hospitals, and other specialists. There are a variety of payment methods, sometimes requiring a policyholder co-pay, which is a percentage of the overall costs of medical care, in addition to a monthly premium. Health insurance is often partially underwritten by an employer. Other health insurance providers require holders to visit certain approved health care professionals.

The liability insurance industry forms the third type of coverage and provides security for physical objects. The main function of this industry is to protect automobiles, real estate, and personal property from loss. For example, if a home burns down or a car gets into an accident, the policyholder generally receives benefits under the policy for the damage or loss.

The insurance industry covers these different fields, but companies are owned primarily in one of two ways. Shareholder ownership comes in the form of a public company that is owned by stockholders and traditionally governed by a board of directors. Mutually owned insurance companies, on the other hand, are owned by the policyholders themselves and function like a private company. These two organizational approaches are vastly different and provide benefits and drawbacks to policyholders.

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JaneAir
Post 3

@SZapper - Usually people are most familiar with term life insurance, which is the kind that pays out benefits up on death. However, there are several types of permanent life insurance where the money can be accessed during the policyholders lifetime. An endowment is the type that pays out the money if the policyholder lives to a certain age.

I think this type of life insurance is definitely worth looking into.

SZapper
Post 2

@indemnifyme - I'm glad you like your job!

I thought I knew a little bit about insurance, but I was really surprised when I read this article. I had no idea there was any type of life insurance that the policyholder could get benefits from while they were still alive. I'm very interested in this!

indemnifyme
Post 1

I work in the insurance industry and it is a very rewarding field. I really like helping people make sure they're protected in the event of something unforeseen happening.

Also, there are a lot of different insurance industry jobs out there. These jobs are all necessary to keep the insurance industry up and running!

You have your insurance sales people, also known as producers. These are the people that might call you up and ask you if you're interested in a free quote on your auto insurance. Then, there are customer services representatives. They service the customers after the policy has been purchases. And of course, you have your claims representatives that help you file a claim if you have an accident or something.

All of these jobs are great, but I tell you, you have to really like people to work in the insurance industry because all you do is talk to people all day long.

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