Insurance is considered a service since the insurer and insured have a long-term connection. Insurers handle claims and financial aid. Since insurance is a contract, the insurer must keep its obligations to the insured.
Another reason why insurance is often viewed as a service is that it is intangible. You cannot see or touch an insurance policy, but it does have value because it provides protection from financial losses. In this way, insurance is similar to other services such as financial advice, legal services, and healthcare.
Of course, insurance can also be considered a product because it is a financial instrument that can be bought and sold. However, the service aspect of insurance is often more important to consumers, especially when they are filing a claim.
Here are some examples of how insurance is viewed as a service:
- When you buy a health insurance policy, you are essentially purchasing a service that will pay for your medical expenses if you get sick or injured.
- When you buy car insurance, you are purchasing a service that will protect you financially if you are involved in a car accident.
- When you buy homeowners insurance, you are purchasing a service that will protect you financially if your home is damaged or destroyed by a fire, storm, or other event.
In all of these cases, the insurance company is providing a valuable service to the customer by protecting them from financial losses.
Since insurance is a marketable financial instrument, it is also a product. Coverage and premiums determine its worth.
So, is insurance a service, product, or good? The answer is: it can be both.
Insurance as a Service
When you buy an insurance policy, you are essentially purchasing a service that will protect you from financial losses in the event of certain events, such as a car accident, a house fire, or a medical emergency. The insurance company will pay for the cost of repairs, replacements, or medical bills, up to the limits of your policy.
In this way, insurance is similar to other services such as legal advice, financial planning, and healthcare. You are paying for the expertise and experience of the insurance company to help you manage your risk and protect your finances.
Insurance as a Product
However, insurance can also be considered a product because it is a financial instrument that can be bought and sold. Insurance policies have a specific value, which is determined by the coverage provided and the cost of the premiums.
Insurance policies can be traded on exchanges, and they can also be used as collateral for loans. For example, if you are buying a house, you will need to have homeowners insurance in place. The lender will require you to provide proof of insurance before they will approve your loan.
In this way, insurance is similar to other financial products such as stocks, bonds, and mutual funds. It is an asset that can be bought, sold, and traded.
Which View is More Accurate?
Ultimately, whether insurance is considered a service, product, or both depends on the specific context in which it is being used.
From the consumer’s perspective, insurance is often viewed as a service because it provides protection from financial losses. Consumers typically purchase insurance policies to protect their assets and their loved ones. They are not as interested in the financial value of the insurance policy itself.
Insurance is typically seen as a product by insurers. Insurance firms do business to earn money. They offer insurance and invest premiums.
Conclusion
So, is insurance a service, product, or good? The answer is: it can be both. It depends on the specific context in which it is being used.
From the consumer’s perspective, insurance is often viewed as a service because it provides protection from financial losses. From the insurance company’s perspective, insurance is often viewed as a product because it is a financial instrument that can be bought, sold, and traded.
Ultimately, it is up to each individual to decide how they view insurance.
