Insurance
lastmod 2025-09-22created 2023-02-247 edits
Insurance is an economic system in which many economic agents cooperate to raise and pay out a reasonably calculated amount of money, in order to relieve the economic blow or burden arising from certain risks (accidents) that occur by chance.
Categories
Principles of insurance
Commercially, security risks usually share the following characteristics.
- A large number of homogeneous exposure units
- Definite loss
- Accidental loss
- Large loss
- Affordable premium
- Calculable loss
- Limited risk of catastrophically large losses
Types of insurance
By what is insured, insurance is broadly divided into life insurance, non-life (property and casualty) insurance, and third-sector insurance.
Life insurance
Life insurance covers natural persons and mainly refers to life insurance (in the narrow sense), health insurance, social insurance, whole life insurance, travel insurance, credit insurance, crime insurance, kidnap insurance, terrorism insurance, and workers' compensation insurance. Life insurance in the narrow sense pays a set amount when the insured dies in an incident or accident.
Non-life insurance
Non-life insurance is aimed at businesses and, in the broad sense, includes marine insurance. It mainly refers to vehicle insurance, aviation insurance, boiler insurance, builder's risk insurance, business insurance, casualty insurance, crop insurance, storm and flood insurance, DBA insurance, disability insurance, overseas insurance, financial insurance, fire insurance, property insurance, marine insurance, transfer insurance, national insurance, no-fault insurance, pet insurance, political risk insurance, pollution insurance, prize indemnity insurance, property insurance, purchase insurance, volcano insurance, and so on.
Third-sector insurance
A contract that promises to pay money or other benefits for a person's illness or injury, or for the resulting nursing care, in exchange for a consideration.
Government/private
Insurance is also divided into government insurance and private insurance.
Government insurance
Compulsory insurance run by the government to prepare for risks; a social security system provided by the state. It is called social insurance or the four major insurances, and consists of the National Pension, employment insurance, health insurance, and industrial accident compensation insurance.
Private insurance
Private insurance, which complements social insurance, consists of insurance products that individuals or companies join freely to prepare for risks, and comes in a great variety of types.
Insurance contracts
Effects of an insurance contract
Insurance is fundamentally a kind of American put option. The idea is that the insured sells the physical asset, or the natural person itself, whose value has collapsed due to a disaster or accident, to the insurance company at an agreed price (the payout).
When an insurance company employee comes and asks you to sign certain documents
One-line summary: never sign a medical consultation or disclaimer consent form ...
Car-related
See Korean: 자동차 for details.