Insurance

Insurance – Meaning, Types and Benefits

Insurance - Meaning, Types and Benefits

The meaning of insurance is pretty simple and straight forward which means “ensuring”. Insurance is a legal contract between two parties the insurance company and the individual who want to secure its health or safety of its goods. Insurance are very common these days they provide protection against loss. Usually insured individual pay monthly premium to insurer company, it is the common process of almost every insurance.

Types of insurance

Insurance is further classified in different types

Health insurance – Health insurance is one of the most common insurance it provide assurance of individual’s health. There are many types of health insurance, a common one and a special health insurance which ensures protection against specific disease. The insured individual has to pay premium to insurance company in return insurance company guarantees to pay insured individual’s medical such as medicine expense, surgery cost, hospitalization cost and other hospital expenses.

Life insurance –  Life insurance means ensuring and protecting your life. An individual usually select life insurance to make sure financial security of your dependents in some miss happening happens to individual’s life. Life insurance is important when a person in single bread earner for its family, under this insurance policy insurance company guarantees financial security of insured individual’s family if he/she expires in unnatural death.

Automobile insurance – Automobile insurance is very common these days, it covers risks related to your vehicles such car and bike. The insurance company protects your vehicles against accidents, if your vehicles meet an unwanted accident than insurance company pay for repair of your vehicle.

Education insurance – Education insurance is important to ensure higher education of your children. In this mode of insurance, insurance company pay for your child’s higher education costs such as university fees or extra tuition fees. Education insurance is a great tool to secure bright future and higher education of your children.

Home insurance – We all dream for a beautiful home and at some point of time we achieve this dream. Home insurance provide security of your home against any accident such as like and natural calamities. The insurance company pays for repair of your home if your home is destroyed in fire and natural calamities such as earthquake.

Benefits of insurance

Divides the risk – Insurance divides the burden of any unwanted miss happening for example the insured individual meets an unwanted diseases or accident in that scenario he/she needs lakhs of rupees to treat itself but an average person don’t have such amount in their bank account all the time. In these difficult times insurance company pay all the expenses for individual’s recovery and in return insured individual pay monthly premium to insurance company. Insurances are basically tool of risk minimization and protection, every aware person should get insurance without any second thought.

Wide range of options – Insurance companies usually has wide range of premium plans; an individual can select any plan as per its income. Insurance starts with basic low premium plans to high premium plans due to wide range of premium plan a middle class average person can also afford insurance and get large protection cover.

Return on investment – Life insurance is basically a long term investment, it provide two sided benefits at one side you get life risk cover and most of the life insurance provide large amount of money on maturity period. When you select life insurance it basically means you are investing in long term investments which provide you good amount of returns in future.

Loan options – You can borrow loans on your insurance policy if you urgently need money for any cause.

Tax benefits – For average salaried person insurance can be excellent options to get tax benefits because section 80C of income tax is an effective way to reduce tax liability.

Assures financial security – In this fast moving world we never know what lies next and what will happen in future, anything can happens to your life in that case insurance companies assures financial support to your parents, wife or children because almost family need money to pay house rents, electricity bills, child education fees or food expense.

Risks

Although insurance minimize the risks but it is always recommend to read terms and conditions of insurance policy carefully before selecting any insurance plan. Insurance should be only taken through a genuine and reliable insurance company.

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