By Updated: 28 Jan, 2019

The concept

There are many different definitions of insurance that are built on each aspect of social, legal, economic, technical and professional research ...)
* Definition 1: Insurance is the contribution of the majority to the misfortune of the few
* Definition 2: Insurance is a business whereby one side of the insured person guarantees to pay an amount called premium to fulfill his or her wish or to a third person in the event of risk will receive a compensation for the losses paid by another party: that is the insurer. The insurer takes responsibility for all risks and compensates for losses according to the methods of statistics
* Definition 3: Insurance can be defined as a means of reducing risk by combining a complete number of object units to turn individual losses into predictable and community losses
These definitions often favor a certain aspect of research (or socially-oriented, definition 1, or economic, legal - definition 2, or technically biased - definition 3).
According to French experts [citation needed], a definition both meets the social aspect (used for social insurance) has just met the economic aspect (for commercial insurance) and both Technical and legal aspects can be stated as follows: Insurance is an activity through which an individual is entitled to a subsidy thanks to a contribution to himself or a third person in the event of a risk. This subsidy is paid by an organization, which is responsible for all risks and compensates for losses according to the methods of statistics.

Features of insurance

* Insurance is a special service;
* Insurance is both chargeable and non-refundable;

The role of insurance

* Maintaining production and business capital and stabilizing the life of insurance participants;
* Preventing and limiting losses;
* Insurance is a credit tool;
* Contributing to the development of economic relations between countries through reinsurance activities.

Insurance forms

Business insurance

Business insurance concept

From a financial perspective, business insurance is a financial service activity that redistributes losses when risks occur. From a legal perspective, business insurance is essentially a commitment that one party agrees to compensate for the other when in danger if the other party pays a premium. Therefore, business insurance is the economic relationship associated with the mobilization of financial resources through the contributions of organizations and individuals participating in insurance.

Characteristics of business insurance

* Insurance participants must pay insurance premiums;
* As the most effective measure for the needs of production and business development of enterprises and safety for community life.

Principles of business insurance

* Ensuring legitimate rights and interests of insured participants as well as insurance business enterprises;
* Insurance enterprises operate on the principle of business accounting;
* Insurance businesses operate in accordance with the laws prescribed for businesses in general, and for insurance businesses in general;
* Insurance enterprises operate on the principle of taking a large number of compensated people;
* Insurance enterprises must comply with financial safety principles.

Form of business insurance

Based on the subject of insurance
1. Property insurance:
* Insurance of import and export goods;
* Insurance for ships, boats, cars, ...;
* Fire insurance.
2. Civil liability insurance;
3. Personal insurance:
* Life insurance;
* Non-life insurance.
Based on the nature of operation
1. Voluntary insurance;
2. Required insurance.

Mechanism, distribution and use of business insurance fund

Mechanism of forming a business insurance fund
* Business capital;
* Revenue and income.
Distribution and use of business insurance fund
* Escrow;
* Compulsory reserve fund;
* Compensation for losses and insurance payments;
* Professional reserves;
* Obligations towards the state budget;
* Profit distribution mode.

Social insurance

Concept of social protection

Social insurance is a type of insurance organized and managed by the state to satisfy the material needs to stabilize the lives of workers and their families when facing risks of reducing or losing the ability to work. .

System of social insurance regimes

As recommended by the ILO International Labor Organization in the Geneva Convention in 1952
* Healthcare;
* Sickness allowance;
* Unemployment benefits;
* Old age benefits;
* Allowance for occupational accidents and occupational diseases;
* Family benefits;
* Reproduction allowance;
* Disability benefits;
* Allowances for people who lose caregivers.
In Vietnam, Vietnam Social Insurance implements 5 regimes
* Sickness allowance;
* Maternity allowance;
* Allowance for occupational accidents and occupational diseases;
* Pension benefits;
* Death allowance.

Mechanism of formation and use of social insurance fund

Source of forming social insurance fund
* Employers contribute;
* Employees contribute a part of their salary;
* State contributions and support.
Use of social insurance fund
Expenses for subsidies and expenses for social insurance participants in the following cases:
* Encountered the events specified in the social insurance regime;
* The insured person is a member of social insurance;
* Pay social insurance regularly;
* Other expenses: expenses for management and payment of health insurance according to regulations, agency commissions, etc.

Health Insurance

Health insurance concept

Health insurance is an economic relationship associated with the mobilization of resources from the contributions of insurance participants to form insurance funds, and use of funds to pay for medical expenses. illness for people covered by illness.
Characteristics of health insurance
* Both indemnity and non-indemnity nature;
* The process of distributing health insurance funds is closely tied to the director function in money for the purpose of creating and using funds.
Operating principle of health insurance
* For the benefit of the insured and ensuring health safety for the community;
* Insurance only for unforeseen risks, not insurance for certain risks that will occur or have occurred;
* Operation is based on the principle of a small number of compensated people.
Subject of health insurance
The subject of health insurance is the health of the insured (risk of illness, illness, ...).
Form of health insurance
* Compulsory health insurance;
* Voluntary health insurance.
Scope of health insurance
* Health insurance is a social policy of every country in the world organized by the government, to mobilize the contributions of all walks of society to pay medical expenses for participants. insurrance;
* Health insurance participants who are exposed to health risks are paid for medical examination and treatment expenses at different levels at medical facilities;
* A number of diseases that the medical examination and treatment are covered by the state budget according to regulations; Health insurance agencies do not have to pay in this case.

Mechanism to form and use health insurance fund

Form a health insurance fund
* State budget allocations;
* Sponsorship of social and charity organizations;
* Health insurance premiums of insured participants, for retirees and loss of energy: contributed by social insurance;
* Insurance fee of the employer's organization.
Use of health insurance fund
* Payment of medical expenses for insured participants according to norms;
* Reserve and reserve expenses;
* Expenses for preventing and limiting losses;
* Management costs;
* Spending on support for upgrading medical facilities.

General commitments in insurance contracts

Common exclusion terms

Insurance terms commonly found in insurance policies

Insurance money
Exemption level / Discount level
Limitation of responsibility

Compare with betting

Some people think that participating in insurance is like a bet. Insurance companies will bet that you or your property will not suffer losses while you are using money on other things. It can be roughly understood that: the difference between the insurance premium and the insurance company's liability limit is prorated (similar to playing seahorses at a ratio of 10: 1). For this reason, many religious groups (including Amish and Muslim) have not participated in insurance, instead they rely on community support when disaster strikes. In other words, this community will support them to recover lost losses.
However, this method does not effectively support large risks. Even insurance companies in the West have a hard time dealing with big risks. For example, floods will affect almost the entire city, and insurance companies will face many difficulties when compensation is required. A typical example is flooding in New Orleans, 2005. Similarly, the losses caused by war and earthquakes are also excluded. However, it is still possible to cover flood and earthquake losses through reinsurance.
In multiplayer games, the scale has been determined from the beginning of the game and is not affected by players. As for insurance participation, such as fire insurance, insurance participants are required to find ways to minimize risks: install fire alarms and use fire-proof materials to minimize losses caused by fire. In addition, insurance businesses also help to minimize losses when there are risks.
Thus, insurance is similar to betting at risk, but there are differences in motivation (finding risk or avoiding risk). For betting, you have no choice or lose or win. But for insurance, you can manage risks that you can't avoid or pure risks that you can't predict. Risk management is the identification and control of risks. Avoiding, minimizing or transferring risks is a way to make better predictions for consumers or businesses so that they can maximize the benefits of their opportunities.
Betting is also considered a type of risk not covered.
* The necessity of purchasing Insurance: Insurance is a form of risk transfer. Buying insurance is actually buying peace of mind, in exchange for the uncertainty of possible damage with certainty through financial compensation.