Insurance
Insurance provides a Financial Cover and Reduces Uncertainties occurring in Business and Human Life.
Getting insurance is important as you will be financially secured to face any unforeseen problems that come in life and business. Insurance also forms an important part of an individual’s financial planning.
What is Insurance?
Primarily Insurance is a type of contract which is represented by a policy. Here the individual or entity receives a financial reimbursement from the insurance company against losses incurred. The insurance policyholder has to pay regular amounts of money (insurance premium) to the insurance company.
Hence the Insurance policy contract provides financial protection to the policyholder against any unfortunate events. In any of such cases, the insurance nominee can file a claim with the insurer. After evaluating the terms of the policy, the insurer can settle the claim.
Components of Insurance
Before signing up for an insurance policy, learn about its components
The Insurance Premium is the monthly cost that you need to pay as an insurance cover. The premium is a regular cost, although it can be monthly, quarterly, half-yearly, or annual depending on your policy plan.
Policy Limit is the maximum claim amount that the insurance company is liable to pay in case of any losses. In most cases, the higher is the policy limit, the higher will be the insurance premium payable.
It is the amount that the insuree has to pay before the insurance company pays the claim. Deductibles are used to discourage insignificant claims by the insurance policyholder.
Types of Insurance
There are risks everywhere around you. And in order to manage the risk component, there are various types of insurance. Hence the main types of insurance are:
Life Insurance policy means that an individual and an insurance company enter into a contract wherein the company gives financial protection to the insuree. In the event of his death, the policy matures and the insurance amount is given to his family or nominee after some time.
The insurance policies that offer financial compensation on any losses other than death come under General Insurance Category. Examples for General Insurance could be insurance for housing, vehicle, travel, etc.
What is Life Insurance?
A Life Insurance policy can be defined as a contract that offers an individual financial compensation in case of disability or death. In the unfortunate event of death, the policy matures and a claim is filed by the policy beneficiaries. The Life Insurance Agent or company will assess the policy &necessary documents to settle the claim. The policy beneficiaries will receive compensation after some time.
Types of Life Insurance
- Life Insurance Term Plan
- Endowment Plan
- Unit Linked Insurance Plans (ULIP)
- Money-Back Plan
- Children’s Plan
- Whole Life Insurance
- Retirement Plan
What is Life Insurance Term Plan?
The Term Plan provides financial protection to your family at low premium rates. The Term Life Insurance Plans primarily provide the benefit of life cover at the most affordable rates. The insuree can assure a good claim amount for his family in the event of his death. Such Insurance Term Plans can help you with Asset Security, Lifestyle Risk Management, and Financial Cover for your loved ones.
Features of Life Insurance Term Plan Policy
- The Term Plans are very Affordable
- The Minimum Age for entry is 18 Years
- Flexible Payments Options for Premium
- The Insuree can Term Plan Tax Benefits under Section 80C of Income Tax Act
- Option for Increasing the Term Plan Contract
- Family Life Cover
What is General Insurance?
General insurance policies mean the contract that offers financial compensation to the policyholders on losses other than death. General Insurance includes risk coverage from theft, man-made disasters, accidents, travel, vehicle, floods, etc. The General Insurance policy pays the claim amount for the losses during the policy period.
Types of General Insurance
The Types of General Insurance are:
Motor Insurance provides risk coverage for your vehicle against any accidents, damages, theft, vandalism, etc. Ex- Car Insurance, Two Wheeler Insurance, Bike Insurance, etc
Since the home is a basic necessity, it is important to secure your house with a good home insurance policy. The policy will safeguard the house and all the items in it against any damage or loss.
Health Insurance protects the policyholder from the risks pertaining to health and medical emergencies. The Health Plan also covers that hospitalization expenses up to the insured sum.
In International Traveling, if you suffer any loss of baggage, flight delay, trip cancellation, etc, the travel insurance policy will safeguard you. Some policies also offer cashless hospitalization while traveling.
How to buy Insurance Policy
This is a simple 5 step process:
- Understand your needs, risks involved, and financial objectives
- Check all the options available with your Insurance Agent
- Select the Plan that suits your requirements
- Fill the Application
- Start paying the Premium for Insurance online or offline
Benefits of Insurance
The primary advantages of Insurance are:
- Financial Cover against uncertainties
- Risk Management
- Cash Flow Management
- Opportunities for investment
- Payment of losses in the unfortunate events
Why is it important to get Insurance?
The world that we live in is full of uncertainties and risks. This is why getting insurance is important as it ensures financial security for you and your family in the time of a problem. But apart from risk management, there are also has some other reasons why Insurance is important.
- Insurance Provides financial support to the family in times of medical emergencies
- Insurance promotes economic growth by mobilizing the domestic savings
- Provides security to Businesses and Individuals
- Spreads Risks via Risk Management Policies
- Insurance Plans generate Long-term Financial resources via monthly premium collections.
FAQs on Insurance
Yes, any individual with financial dependents should buy life insurance. The beneficiaries will get Life Insurance Benefits like financial safety, loan, education assistance, etc.
There is no maximum limit on Life Insurance Policy beneficiaries.
The most recommended Insurance Policies are life insurance, health insurance, and auto insurance.
The insurance policyholder has to pay the Insurance premium amount.
Yes, you can get the exemption of up to 1.5 Lakh under Section 80C of the Income Tax Act for the life insurance premium paid.
Factors like your age, gender, health, income, profession, etc can affect the premium for Life Insurance Plans.
Paying Insurance Premium Annually is less expensive as compared to monthly payments.
Usually, the age limit for getting health insurance is up to 65 years.
Life Insurance policy comes into effect when the policyholder dies, whereas general insurance policy covers losses apart from the death of the insuree.
General Insurance is important because it protects your and your family’s financial well bieng in the event of any damage or loss.