Do you know what is insurance or insurance? Why do we all need to ensure our life or our property, how many types of insurance are there, etc? Because today we will learn about all the aspects of insurance.
As we all know that both the life and property of any human being is surrounded by death, incapacity, and ruin. No one knows what is going to happen to them the very next moment. At the same time, such accidents can cause you a lot of financial losses. At the same time, insurance is a very good way to protect yourself from such a situation, by which these risks can be removed to a great extent.
Wherein the full responsibility of these risks from these insurance schemes is handled by the insurance company. Insurance protects us from many risks such as a fire in the house, car accidents, and theft of the house. At the same time, there are some types of insurance that also provide money for the treatment of your disease, while on your death, this insurance amount is also offered to your family members.
On the other hand, if you want to know more about what is insurance, then you will have to read this article completely about what is insurance. By which you will get complete information about it. Then without delay let’s start.
What is Insurance
Insurance is a kind of legal agreement between two parties.
1. The first insurance company (which gives insurance or insurer)
2. And the second is the individual (who takes insurance or is insured).
In this, the insurance company promises that if some untoward or accidental incident happens, then the company is going to take responsibility for everything. At the same time, all the things that may have been damaged will be completed by the company itself.
These types of events are called contingencies because there is no exact reason for these events as to when they are going to happen. In this, the insurance company has to compensate for all the losses as promised earlier.
Principles of Insurance
When you buy insurance from an insurance company, the insurer (that is the company) and the insured (that is you) receive a legal contract of insurance, this is called an insurance policy.
This insurance policy includes all the details that you should be aware of, such as all the terms and conditions under which the insurance company is going to pay you your sum insured, if there is a loss, if you are not, So you have chosen. Payment will be made to the nominee.
Insurance is a very good way to protect yourself and your family from any financial loss. It has often been found that the bigger the insurance cover, the smaller the premium.
This is probably because very few people claim this type of insurance but they have to pay all the premium for it. Therefore the company has more profit in it.
Any person or company can apply to get insurance, but the insurance company decides what type of insurance is to be provided to him. For this, the insurance company evaluates your application thoroughly before giving you any decision.
Whereas most of the time the company refuses to provide insurance to high-risk applicants.
You have to first choose what you need insurance on. After that, the insurer calculates his risk, and only after checking everything tell you how much premium you will have to pay.
1. Select Policy
An insurance policy is such a document in which you have written all the details about it. Like as which things you get insurance and for what not.
2. Pay Premium
Premium is called the amount that you pay every month or once a year according to your policy. Its amount depends on what things this insurance is covering.
3. Claiming
If something untoward happens within the insurance period, then you or your nominee can claim your insurance. In this, you have to give full details of your accident which the insurance company checks and if your claim is correct from all the places then you get your claimed amount as was decided earlier.
Types of Insurance
Although there are many types of insurance, here we will know about some important types.
1. Life Insurance
As the name suggests, your life is insured in life insurance. You buy life insurance so that even if you are not there, your family is not dependent on anyone and you are financially secure yourself.
Life insurance becomes very important for those people when you are the only earner in your family and the whole family depends on you.
2. Health Insurance
Health insurance is taken to cover the cost of medical treatments. Also, there are many types of health insurance policies that cover different diseases and ailments.
You can also take a general health insurance policy or you can also take a specific policy for any disease. The premium paid in this covers all types of treatment, hospitalization, and medication costs.
3. Car Insurance
Similarly, you can ensure your car with Car Insurance. If any accident happens then you get compensation for it.
4. Education Insurance
In this insurance, you are depositing money for the right education for your child and when the right time comes, you get a lump sum amount for the education of your child.
5. Home Insurance
If you have built your house then you must buy home insurance because if there is any damage to your house, whether it is fire, any natural calamity, or anything else, you get your compensation in everything.
What tax benefits are also available by taking insurance?
There are other benefits of taking insurance except for safety and security benefits. With this, you also get tax benefits.
1. Life insurance premium that can also be claimed up to ₹ 1.5 lakh as a tax-saving deduction under section 80C.
2. Medical insurance premium up to ₹25,000 for yourself and your family, while ₹25,000 for your parents, you can claim a tax-saving deduction under section 80D.
You have to e-filing these claims at the time of filing income tax returns.
How is Insurance Claim done?
Let us now know how you can claim your insurance amount.
1. For this you have to first make your claim against your insurance policy.
2. Now you have to provide all the details regarding your loss which you have suffered. It differs from insurance to insurance.
3. Then you have to submit all the bills/proof of your damage, loss, hospitalization, etc.
4. Now your work ends here, now the insurance company will verify your claim.
5. Whereas if your claim is proved to be true then you get your claimed amount, according to your loss.
Act of insurance
Insurance has evolved on the basis of a process that protects the loss and uncertainty of people. It is described as a social device to reduce the loss of life and property.
Insurance promotes general economic growth in society so that the process of society can run with stability in the right way. Insurance industries develop such financial institutions which help in reducing the uncertainties and risks in the future.
1. Provide Safety and Security
Insurance provides financial support and it also reduces the uncertainties in business and human life. It provides safety and security against a particular event.
Since there is always a fear of sudden loss, in such a situation, insurance has a big hand in reducing it.
2. Generates financial resources
Insurance generates funds, by collecting premiums. These funds are invested in government securities and stocks. These funds are used for the industrial development of the country so that economic development of the country can take place. At the same time, employment opportunities are also encouraged.
3. Life Insurance Promotes Savings
Insurance not only protects you from risks and uncertainties but also provides an investment channel. Life insurance enables us to make systematic savings on the basis of paying regular premiums.
Wherein life insurance also provides an investment mode.
It inculcates the habit of saving money in us. The lump sum amount of the premium, we get at the time of maturity according to the matured amount in the end. That’s why it encourages to make insurance savings.
4. Promotes economic growth
Insurance generates a significant impact on our economy by mobilizing domestic savings. Insurance provides this accumulated capital in the form of productive investments.
Insurance enables, mitigates losses, promotes financial stability, and promotes trade, together with promoting trade and commerce activities, which ultimately provide economic growth and development. Therefore, insurance plays an important role in the sustainable growth of the economy.
5. Medical support
Medical insurance is considered very important to manage the risk of heath. Because any one of us can fall ill at any time, which can cost a lot. On the other hand, if you have medical insurance then it covers your big expenses, which can be of great help to you in such situations.
6. Spreading the Risk
Insurance helps to spread our risk. Due to this, it protects us from big losses.
7. Funds Collect Has A Big Source
Large funds can be easily collected through premiums. These funds can be used in the development of the country, which leads to the economic growth of the country.
Benefits of taking insurance
By the way, insurance provides a lot of benefits to any individual, family businessman, business as well as society. At the same time, let us know about some of its important advantages: –
1. Insurance provides economic and financial protection, to the insured person or thing that has been insured, that too in a nominal amount called a premium.
At the same time, it provides financial protection to the nominee if there is a pre-matured death of the insured person. Along with this, it also covers many losses such as loss of property due to theft, due to fire, or any natural calamity.
2. At the same time, it reduces the risks of people who otherwise could have caused big losses for them. Although it is not possible to completely remove the risks and uncertainties, it can be reduced to a great extent. That’s why insurance companies charge you a small premium to earn your risks.
3. It helps in maintaining the standard of living of the people if there is such an unexpected loss. At the same time, it also protects us from unfortunate financial crises.
4. Since we have to pay some premium in insurance, for which it encourages us to save. Due to this saving becomes a habit of ours.
5. It protects us from being dependent on someone else. So that you can live your life in your own way and empowers us. This life insurance policy provides us full financial support if someone dies.
6. It also helps in taking loans. If you have any policy going on then you can take a loan from the insurance company on the basis of that policy. This policy is kept according to the collateral.
7. It provides new employment opportunities for all. In this modern era, hundreds of entrepreneurs and thousands of employees are engaged in this line.
8. Promotes Foreign Trade. Insurance companies have a big hand in promoting the international trade of a country. Because by insuring the risks of these businesses are greatly reduced, so that they can do the desired export activities of their businesses.
9. Insurance companies have a big hand in operating the business smoothly. Because it divides the loss of properties. At the same time, the motivation of the employees is increased by getting the employees done through the insurance company.
10. It helps in reducing inflation. To reduce inflation, the amount of money has to be reduced. At the same time, taking money from insurance companies on the basis of premiums helps in reducing inflation.
11. These premium amounts are spent in many development areas such as trade and industry. Due to this, the economic growth of the country takes place.
Loss of insurance
Know about the disadvantages of insurance.
1. It does not compensate for all types of losses due to which it favors insurance people, through insurance companies.
2. It takes a lot of time to provide Financial Compensation as one has to go through lengthy legal formalities in between.
3. Although insurance encourages savings, it does not provide as many facilities as are provided by the bank.
4. They intentionally think of compensating the insurer at least so that their profit can be maximized.
5. It also encourages crimes in society, because most of the beneficiaries want to get the insured amount of the policy.
6. Sometimes the total amount of premium becomes more than the maturity amount.
Conclusion:
Whether it is any insurance, life insurance, health insurance, or general insurance, you can buy these insurance policies offline or online. Just as you can buy insurance from insurance agents offline, similarly you can also buy insurance from many websites online nowadays.
The most important thing to note is that you should do complete research from your side before choosing insurance because you may suffer losses due to changing insurance later.
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