Insurance is a legal arrangement between two parties, namely the insurance provider and the individual (insured). It promises the insurance provider to repair the damages of the insured when the insured contingency arises. The incident that triggers a loss is the contingency. The loss or harm to the property may be the death of the policy holder. The contingency is because the occurrence of the incident is unpredictable. In exchange for the insurer's promise, the insured pays a premium.
HOW DOES AN INSURANCE POLICY WORK?
The insurer and the insured offer a valid insurance plan, known as an insurance policy. The insurance policy provides information about the terms and situations in which the insurance provider will pay either the insured person or the candidate the cost of the insurance. Insurance offers a protection against financial loss for yourself and your family. The rate for broad insurance plan is usually slightly lower in terms of money received. The insurance company risks having a high premium cover, since very few covered individuals actually claim the insurance.Therefore you get a huge amount of premiums at a low price. Any person or company may apply for insurance from an insurance company, unless the insurance company refuses to offer insurance. In order to take a decision, the insurance provider will analyse the claim request. Insurance firms usually refuse to provide high-risk applicants with insurance.
TYPES OF INSURANCE SCHEMES
Insurance in India can be broadly divided into three categories:
Life insurance is your life insurance, as the name suggests. You purchase life insurance to ensure financial protection for your workers in the event of your premature death. If you are the primary beneficiary for your family or if your Family is heavily dependent on your salary, life insurance is of special importance. The family of the customer shall be financed by life insurance in the event that the customer dies within the duration of the policy.
Health treatment covering costly therapies is acquired. A number of diseases and disorders are protected by different forms of health insurance plans. You can purchase a general health insurance policy and individual disease plans. The health care premium typically includes medication, hospitalisation and prescription expenditures.
Car insurance is a big policy of all car owners in today's world. This insurance protects you from unexpected events such as injuries. Some plans also reimburse the vehicle for loss in natural disasters such as flooding and seismic events. It also protects the responsibility of third parties where other car owners are responsible for damages.
The child education insurance is similar to a life insurance policy intended to save. An educational insurance can be a perfect way to have a significant sum as your child gets older and receives college admission (18 years and above). You can then use this fund to pay for the higher education cost of your child. The infant is covered for life or the beneficiary of the fund, under this protection, although the parent/legal guardian owns the policy. Using the Calculator for Education Planning, you will estimate the amount of funding for your children's higher education.
Everyone dreams of owning their own houses. The insurance provider will help cover your home's damages or harm caused by incidents such as fire and other natural hazards. Home insurance covers other cases such as lightning, earthquakes and so on.
WHY SHOULD YOU BUY INSURANCE?
Most people agree that insurance is an unnecessary burden. It is because we have faith in our future and our willingness to cope with unseen conditions. But between our supposed capacity and fact there is a big difference. In the event of a medical emergency, for example, a few years of saving could be wasted. This is just one case. There are three reasons why it is important to get insurance:
1.Insurance ensures family’s financial stability
Whatever your saving or monthly income is, an unforeseen occurrence will burn a huge hole in your wallet, or literally put the financing future of your family at risk.
2.Insurance brings peace of mind
The fee you pay to the insurance agency is the price, guaranteeing the coverage of the loss in the event of an unforeseen event by the insurance provider. And it offers a peace of mind to ensure that your danger is protected.
3.Insurance reduces stress during difficult times
Even if you work hard to change your life, an unexpected occurrence will turn things totally upside down, leaving you physically, emotionally and financially tense. Adequate insurance helps in the sense that at least during such a stressful period you don't have to worry about finances and instead concentrate on healing.
A significant part of financial planning is getting insurance – life, health and liability. In unexpected situations, it will save you from financial difficulties. However, three considerations – the obligation, the advantages you get from your policy, and your willingness to afford the premium – may be the decision to purchase insurance.