What is Insurance and What are the Types of Insurance

What is insurance & what are the types of insurance?

Do you know what is an insurance? Why all of us need to ensure our life or our property, how many types of insurance is there. If you also have some doubts about it, then you must read this post till the end because today we will provide information about all aspects of it.

As we all know that the life and property of any human being are surrounded by both death, disability and waste. Nobody knows what is going to happen to them the next moment. At the same time, such accidents can lead to huge financial losses. At the same time, it is a very good way to protect yourself from such a situation by which these risks can be overcome to a great extent.

At the same time, the entire responsibility of these risks is handled by the company through their different schemes. It saves us from many risks like a car accident, house fire, house theft. While there are some types of it that also provide money for the treatment of your illness, at the time of your death, you also offer this insurance amount to your family.

At the same time, if you want to know more about what is insurance, then you have to read this post fully about it. You will get complete information about it.


What is Insurance? Definition and Meaning of Insurance

Insurance is a kind of legal agreement between two parties which is the insurance company (who gives insurance or insurer) and the second is the person (who takes insurance or insured).

In this, the company promises that if something untoward or unforeseen event happens, then the company is the one to take responsibility for everything.

These types of incidents are called contingencies because there is no cure for these events when they are going to happen. In this, the insurance company has to compensate for all the losses as they had promised earlier.


Principles of Insurance 

When you buy it from the company then the insurer (which is the company) and insured (which is you) gets a legal contract of it, it is called an insurance policy.

Its Policy contains all the details about which you should know, such as all the conditions and circumstances under which the insurance company is going to pay you your insurance amount, if there is any loss then if you do not then you have selected Gone nominee.

It is a very good way to protect yourself and your family from any financial loss. It has often been found that the larger it covers, the smaller the premium. This is probably because very few people claim this type of insurance, but they have to pay all the premiums for it. Therefore, the company has more profit in it.

Any person or company can apply to get it, but this type of company decides what type of insurance to provide. For this, the company thoroughly evaluates your application before making any decision. Most of the time, the company refuses to provide insurance to high-risk applicants.

First of all, you need to choose what insurance do you need. After that, the insurer calculates risk, and only after checking everything, tells you how much premium you have to pay.


1. Choose the policy

An insurance policy is such a document that you have all the details written about it. Like what you get insurance for and what?

2. Make Premium Pay

Premium is called the amount that you pay every month or once a year according to your policy. Its amount depends on what it is covering.

3. Claim

If something untoward happens within its period, you or your nominee can claim their insurance. In this, you have to give full details of your accident which the company checks and if your claim is correct from all the places then you get your claimed amount as was decided earlier.


What are the types of insurance?

Although there are many types of it, here we will learn 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 themselves are financially secured.

Life insurance becomes very important for those people when you are the only one earning in your family and the whole family depends on you.

2. Health Insurance 

Health insurance is taken to cover the expenses of medical treatments. There are also 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 a disease. The premium pay that is made in it covers all types of treatment, hospitalization and medication costs.

3. Car Insurance

In the same way, you can ensure your car with Car Insurance. If any accident is to happen then you get its compensation.

4. Education Insurance

In this, you are depositing money for the correct education of your child and when that 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 it causes any damage to your home, whether it is fire, natural disaster or anything else, you get your compensation in everything.


Will you get tax benefits from taking insurance?

There are many benefits to it except safety and security benefits. You also get tax benefits from this.

1. Life insurance premium up to Rs 1.5 lakh can also be claimed under a tax-saving                deduction under section 80C.

2. Medical insurance premium up to Rs 25,000 for yourself and for your family, while Rs     25,000 for your parents, you can claim under a tax-saving deduction under Section 80D.

You have to make these claims at the time of filing e-filing income tax returns.


How is Insurance Claim done?

Let us now know how you can claim your amount from it.

1. For this, you must first make a claim against your insurance policy.

2. Now you have to provide all the details regarding your loss that 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 company will verify your claim.

5. If your claim is proved correct then you get your claimed amount, according to your            loss.


Insurance functions

It has played an important role in protecting people’s loss and uncertainty. It is described on the basis of a social device in reducing the loss of life and property.

It promotes the general economic process in society in order that the method of the society will run properly with stability. Its industries develop monetary establishments that later facilitate to scale back uncertainties and risks.


Importance of insurance

1. Provide Safety and Security

It provides financial support and along with it also reduces uncertainties in business and human life. It provides safety and security against any particular things.
Since there is always the fear of sudden loss, it has a big hand in reducing it.

2. Life insurance promotes savings

It not only protects you from risks and uncertainties, but it also provides an investment channel. Life insurance enables us to make systematic savings on the basis of filling the regular premium. Life insurance also provides an investment mode.
It creates a habit of saving money. The lumpsum amount of premium that we get at the end of the matured amount at the time of maturity. Therefore it encourages you to make savings.

3. Generates financial resources

It generates funds by collecting premiums. These funds are invested in government securities and stocks. These funds are used in the industrial development of the country so that the economic development of the country can be done. Employment opportunities also get a boost.

4. Promotes economic growth

It generates a major impact on our economy by mobilizing domestic savings. It gives this accumulated capital as productive investments. It enables it to mitigate loss, promotes financial stability and promotes trade, as well as promotes trade and commerce activities thereby ultimately providing economic growth and development. Therefore, it 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 many of us can fall ill at any time, which can cost a lot. At the same time, if you have medical insurance, then it covers your big expenses which can help you a lot in such situations.

6. To spread the risk

It helps in spreading our risk. With which it protects us from large losses.

7. Funds Collect has a great source

Large funds can be easily collected by premiums. These funds can be used in the development of the country, which leads to the economic growth of the country.


Benefits of insurance

By the way, it provides immense benefits to any individual, family businessman, businesses as well as society. Let us know about some of its important advantages: –

1. It provides economic and financial protection, insured person or thing that has been insured, that too in a nominal amount called premium.
At the same time, it provides financial protection to the nominee if the pre-matured death of an insured person occurs. Along with this, it also covers many losses such as loss of property due to theft, from a fire or from any natural calamity.

2. At the same time, it reduces the risks of people, which 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 its company charges you a small premium to earn your risks.

3. It helps in maintaining the standard of living of the people if any such unexpected loss occurs. It also protects us from an unfortunate financial crisis.

4. Since we have to pay some premium in it, for which it gives us incentive on saving. Due to which saving becomes our habit.

5. It protects us from being dependent on each other. So that you can live your life in your own way and empower us. This life insurance policy gives us full financial support if someone dies.

6. It also helps in taking the loan. If you have a policy going on, then you can take a loan from its company on the basis of that policy. In which 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. Its companies have a big hand in promoting international trade in a country. Because it reduces the risks of these businesses, due to which they can do the export activities they want.

9. Its corporations have a giant hand in creating businesses operate smoothly. Because it leads to loss of properties. At the same time, the motivation of the employees is increased by the insurance of the employees by the company.

10. It helps in reducing inflation. To reduce inflation, the amount of money has to be reduced. While its companies take money from people at a premium, it helps to reduce inflation.

11. These premium amounts are spent in many development areas such as trade and industry. Which leads to the economic growth of the country.

Disadvantages of insurance.

1. It doesn’t make compensate for all kinds of losses so it favors insurance for people by its corporations.

2. Money Compensation takes a great deal of time to provide because it has got to undergo long legal formalities in between.

3. Although it encourages savings, it doesn’t offer similar facilities as that provided by the bank.

4. They intentionally think to compensate the insurer at least so that their profit can be maximized.

5. It also promotes crimes in society, as most beneficiaries want the insured amount of policy.

6. Sometimes, the total amount of premium is more than the maturity amount.


Summary of Insurance

Life, health or any general insurance, you can buy these policies offline or online. Just like offline you can buy it from agents, similarly, nowadays you can buy from many websites online.

The most important thing is that you should do all the research on your behalf before choosing insurance, because after changing it later, you may suffer loss.

We hope you have liked this post about what is insurance & Types of Insurance. This will also save your time and you will also get all the information in one place. If you have any feedback about this post for some improvement in it, then you can comment down below.

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