What is Insurance? Purpose, Advantages, and Types

What is Insurance?

You've probably heard of insurance services, haven't you? Well, Insurance services allow you to dodge unusual occurrences. Before describing what insurance is and how it works, I would like to mention that you should always take insurance services from a company that has been in business for a long time.

Insurance – Definition and Meaning

The word Insurance comes from the Latin Securus, which means free from care. It is an agreement by which a company or government agency commits to pay compensation for certain damages, losses, illnesses, or deaths in exchange for a premium.

Insurance is a legal contract between two parties:

  • the insurance company (insurer)
  • the individual (insured).

What is an insurance policy?

The insurance company pledges to recompense for financial casualties due to the insured unexpectedness in return for the premiums paid by the person. Compensation will help the person cover the deficit of medical expenses, car breakdown, business crisis, or travel disaster. The Insurance company will pay for financial casualties according to the agreement. The agreement stipulates situations that the company promises to pay you to overcome.

 

Edges of Insurance Plans:

Insurance plans: can be helpful to anyone looking to guard their family, assets/property, and themselves against financial crises.

Insurance plans: will help you pay for medical emergencies, hospitalization, contraction of any sicknesses and cure, and medical care needed in the future.

 

Types

In the following picture, you can see all the types of insurance available for people.

The two primary types of insurance coverage:

  • Life Insurance.
  • General Insurance.

Popular types of Insurance in India:

  • Life Insurance
  • Car Insurance
  • Home Insurance
  • Health Insurance

All the types have different policies and terms. The insurance companies highly value the policies and terms mentioned in the contract. Sometimes the Insurance company terminates one's insurance if the person does not fulfill the commitments mentioned in the policy agreement.

 

10 benefits of having an Insurance Policy

  1. An Insurance policy does not save you from accidents or life risks, but it helps you avoid financial crises that you or your family could face if something happens to you.
  2. It covers damage to your vehicle and saves you financially if you're liable for someone else's wounds or damages.
  3. With an insurance policy by your side, you can tackle this uncertainty with ease.
  4. Insurance compensation helps you cover the medical bills of your family member.
  5. If you travel somewhere, buy travel insurance for medical emergencies, trip cancellation, trip interruption, delays, medical evacuation, and lost, damaged, or stolen luggage.
  6. A fire insurance policy pays for the loss of property, jewelry, business or personal property, and surrounding structures due to a fire accident.
  7. If you die while having life insurance, your family members will continue to receive your insurance money. 
  8. Your dependents do not have to stress about the cost of living expenditures.
  9. Life insurance is tax-free. Your beneficiaries will get a lump sum death benefit.
  10. Insurance will play a significant role in your family's financial well-being by paying them a lump sum or in monthly installments so that your family members can manage all their financial problems properly after your death.

Talk to an expert

After reading all these benefits, don't rush in purchasing insurance. Consult with an Insurance expert and know all the essential details about insurance and companies. Sometimes Insurance sellers will try to sell you insurance that you don't need. An expert can help you understand what type of insurance you need. Don't waste your investments on redundant insurance policies.


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