As we all know that Insurance is an agreement by which the state or a company undertakes to provide a guarantee of cover for death, specified loss, damage or illness in return for payment of a particular installment. Insurance policies help individuals to make things easy in their life. One of the main help that these policies offer to its customers is financial cover and helps them to make their life much better and efficient. Basically people look for life insurance, property insurance and health insurance. Most common reason to go for these insurance policies is to have another option in case of financial emergency. In modern era as people are facing different type of issues related to their health, property, education and several other problems.
The insurer and the insured get a legal contract for the insurance, which is called the insurance policy. The insurance policy has details about the conditions and circumstances under which the insurance company will pay out the insurance amount to either the insured person or the nominees.Insurance is a way of protecting yourself and your family from a financial loss. Generally, the premium for a big insurance cover is much lesser in terms of money paid. The insurance company takes this risk of providing a high cover for a small premium because very few insured people actually end up claiming the insurance. This is why you get insurance for a big amount at a low price.Any individual or company can seek insurance from an insurance company, but the decision to provide insurance is at the discretion of the insurance company. The insurance company will evaluate the claim application to make a decision. Generally, insurance companies refuse to provide insurance to high-risk applicants.
Insurance in India can be broadly divided in following ways:
As the name suggests, Life insurance is insurance on your life. You buy life insurance to make sure your dependents are financially secured in the event of your untimely demise. Life insurance is particularly important if you are the sole breadwinner for your family or if your family is heavily reliant on your income. Under life insurance, the policyholder’s family is financially compensated in case the policyholder expires during the term of the policy.
Health insurance is bought to cover medical costs for expensive treatments. Different types of health insurance policies cover an array of diseases and ailments. You can buy a generic health insurance policy as well as policies for specific diseases. The premium paid towards a health insurance policy usually covers treatment, hospitalization and medication costs.
In today’s world, a car insurance is an important policy for every car owner. This insurance protects you against any untoward incident like accidents. Some policies also compensate for damages to your car during natural calamities like floods or earthquakes. It also covers third-party liability where you have to pay damages to other vehicle owners.
The child education insurance is akin to a life insurance policy which has been specially designed as a saving tool. An education insurance can be a great way to provide a lump sum amount of money when your child reaches the age for higher education and gains entry into college (18 years and above). This fund can then be used to pay for your child’s higher education expenses. Under this insurance, the child is the life assured or the recipient of the funds, while the parent/legal guardian is the owner of the policy.
You can estimate the amount of money that will go into funding your children’s higher education using Education Planning Calculator.
We all dreaming of owning our own homes. Home insurance can help with covering loss or damage caused to your home due to accidents like fire and other natural calamities or perils. Home insurance covers other instances like lightning, earthquakes etc.
The following are some of the advantages of taking an insurance policy.
Perfect cover for your family after you are gone: As it is impossible to predict the future, no one knows what happens next. Protecting your family from an unforeseen potential peril could be your top priority. An insurance policy can render a helping hand when you are unable to support your family or after your death.
Benefit of compensation: The financial loss caused by the peril is compensated by an insurance. If the untoward incident happens before completion of the tenure, you can claim the financial loss covered under the insurance without much hassle. It reduces lot of your mental stress and agony caused by the peril. In case of life insurance, your family gets a financial cover after your death.
Tax Benefits: irrespective of the insurance plan you buy, you can claim tax benefits up to 1.5 lakhs under section 80C as per Income Tax Act 1961.
Financial support post retirement:There are special insurance plans that are tailor-made to support after your retirement. It makes you financially healthy after when you would not be able to earn money at old age. Moreover, buying an insurance at a young age becomes cheaper in the long run.
For specific purposes: An insurance is earmarked for specific goals unlike other financial instruments. This helps you utilize the funds for the purpose you had initially opted.
For smooth business operation:Even when you meet with unexpected loss in the business, an insurance can help you manage the loss. An insurance policy taken for your employee becomes a motivating factor at the workplace and helps in smooth business operation.
Apart from the safety and security benefits of buying insurance, there are also the income tax benefits that you can avail.
These claims have to be made at the time of e-filling income text return.
Insurance benefits individuals, organizations and society in more ways than the average person realizes. Some of the benefits of insurance are obvious while others are not.
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