What is insurance and what are the types of insurance?

Do you know what is insurance or insurance? Why all of us must insure our life or our property by insurance, there are many types of insurance or insurance, etc. If you also have some doubts about insurance or insurance, then you must read this post till the end because today we will know about all aspects of insurance.

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

While these insurance schemes, the entire responsibility of these risks is handled by the insurance company. Insurance saves us from many risks such as fire in the house, car accident, theft in the house. While there are some types of insurance that also provide money for the treatment of your illness, at the time of your death, they also offer the insurance amount to your family.

If you want to know more about What is insurance then you have to read this article fully about what insurance is. With which you will get complete information about it. Then let’s start without delay.

What is Insurance?

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

In this, the insurance company promises that if something untoward or unforeseen event happens, then the company is the one to take the responsibility of everything. All the things that have been damaged will be completed by the company itself.

These types of events 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 promised earlier.

Principles of Insurance

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

This insurance 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 don’t then your Selected by nominee.

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

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

With insurance, the only thing is, you have to first choose what insurance you need.
After that the insurer does his risk calculate , and after checking everything. He only 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 not.

2. Pay Premium

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

3. Claim

If something untoward happens within the insurance period, then you or your nominee can claim their 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.

What are the types of Insurance

Although there are many types of insurance, but 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 generic health insurance policy or can take any specific policy for any disease. The premium paid in it covers all types of treatment, hospitalization and medication costs.

3. Car Insurance

Similarly, with Car Insurance you can insured your car. If any accident is to happen then you get compensation.

4. Education Insurance

In this insurance, you are depositing money for the right education of your child and when that time comes, you get a lumpsum amount for your child’s education.

5. Home Insurance

If you have built your house, then you must buy home insurance because if it causes any damage to your house, whether it is fire, natural disaster or anything else, you get your compensation in everything. Is received.

Do you also get tax benefits from taking insurance?

There are other benefits of taking insurance, except safety, security benefits. You also get tax benefits from this.

1. Life insurance premium can also claim up to ₹ 1.5 lakh under a section of tax-saving deduction under Section 80C

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

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

How is Insurance Claim done?

Now let us know how you can claim your insurance amount.

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 insurance company will verify your claim.

5. At the same time, if your claim is proved correct then you get your claimed amount, according to your loss.

Insurance Functions

Insurance has evolve at the heart of a process that protects people’s loss and uncertainty. It is described as a social device in reducing the loss of life and property.

Insurance society it promotes general economic growth so that the process of the society can run properly with stability. Also Insurance industries develop financial institutions that later help to reduce uncertainties and risks.

1. Provide Safety and Security

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

2. Generates financial resources

Insurance generates funds by collecting premium. 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.

3. Life insurance promotes savings

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

4. Promote Economic Growth

It generates significant impact on our economy by mobilizing domestic savings too. Insurance gives this accumulated capital as productive investments. Insurance 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, 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 of us can fall ill at any time, which can cost a lot. Whereas if you have medical insurance, then it covers your big expenses which can help you a lot in such situations.

6. To spread risk:

Insurance helps in spreading our risk. So that it protects us from big losses.

7. Funds Collect is a Great Source

Large funds can be easily collected by premium. 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, insurance provides immense benefits to any individual, family businessman, businesses as well as society. Let us know about some of its important advantages: –

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1. Insurance provides economic and financial protection, insured person or thing that has been insured, also in a nominal amount called premium.
It provides financial protection If the nominee has any pre-matured death of insured person then. 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, but it can be reduced to a great extent. That’s why the insurance 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 unfortunate financial crisis .

4. Since we have to pay some premium in insurance, for which it gives us incentive on saving. By which 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 empower us. This life insurance policy gives us full financial support if someone dies.

6. Insurance also provides help in taking loan. If you have a policy going on, then you can take a loan from the insurance company on the basis of that policy. In which this policy is kept according to the collateral.

7. It offers new employment opportunities for everyone. 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 international trade of a country. Because the insurance reduces the risks of these businesses, due to which they can do the export activities they want.

9. Insurance companies have a big hand in making 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. Insurance companies help people reduce inflation by taking money from people at a premium.

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

Loss of Insurance

Know about the disadvantages of insurance.

1. Insurance does not compensate for all types of losses so that it favors insurance with people, by insurance companies.

2. It takes a lot of time to provide for Financial Compensation as it has to pass through lengthy legal formalities in between.

3. Though insurance encourages savings, but it does not provide the same facilities as that provided by the bank.

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

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

6. Sometimes the total amount of premium exceeds the maturity amount.

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Thanks to read “What is insurance and what are the types of insurance?” article. We will get back with new topics. Stay tuned with us. Have a great day.

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