Insurance is a legal agreement between an individual (the insured) and the insurance company, as a promise to pay the financial coverage for unfortunate incidents such as loss of life, property, house, etc. In simple terms, insurance means protection from financial loss.
Having insurance helps you with protecting your family and your other property in case of financial loss. Insurance helps you pay for hospitalization, medical bills, and other medical emergencies. It also encourages savings in terms of paying premiums and helps with achieving your other financial goals.
Premiums are the amount an individual or a company has to pay for the insurance policy taken. Different insurance companies provide different plans for the payments of the premium. Premiums are paid in advance and the limit set by IRDA is ₹50,000.
Many companies now offer the payment of premium to be paid online. And depending upon your insurance scheme, you can pay the premium on a monthly, bi-monthly, quarterly, half-yearly, or yearly basis.
Insurance is mainly divided into two categories, General Insurance and Life Insurance.
General insurance includes:
- Health insurance
Health insurance provides for medical expenses such as hospitalization, surgeries, etc. It offers cashless treatment or reimburses the cost.
- Motor insurance
Motor insurance covers the losses incurred in case of theft or damage to an individual’s vehicle. It provides coverage to private vehicles or commercial vehicles.
- Home insurance
Home insurance is insurance to cover your losses of your owned or rented property or your belongings from unseen circumstances such as thefts, burglaries, fires, floods, etc.
- Fire insurance
Fire insurance, as the name suggests, is insurance against property or belongings damaged due to fire.
- Travel insurance
Travel insurance provides for medical expenses or other risks and losses you may incur during your travel.
Life Insurance includes:
- Term life Insurance
Term life insurance guarantees payment to the beneficiary mentioned in the contract in case of the insured’s untimely death.
- Whole life insurance
Whole life insurance is insurance where the insured is covered for life as long as they keep paying the premium on time.
- Endowment plans
Endowment plans pay a lump-sum amount on maturity, that is, a specific time mentioned in the contract, or on death.
- Child plans
Child plans are investments made for a child’s better future. On maturity, it pays a lump-sum amount that you can use to pay for your child’s school or college tuition or any other expenses.
- Pension plans
Pension plans are investments to have a secured and financially stable retirement life. It can pay the lump-sum amount monthly like a after retirement salary.
To choose insurance, know your goals/requirements. Select the type of insurance and compare them with other companies. Compare the premium amounts and the benefits you can get from each. Read the ‘Terms and Conditions before choosing the policy.
Different types of documents are needed for different insurance policies. For life insurance policies, the following documents are required.
- Life insurance form, filled and signed by the insured.
- Photograph of the insured.
- Age proof of the insured.
- Identity proof of the insured.
- Address proof of the insured.
- Medical report of the insured, if required, because of the age or sum chosen for the insurance.
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