What Is Insurance? Perfect information of insurance

What Is Insurance? | A complete information in a simple form

Hello friends, today we will get some information about insurance. What is insurance? What are its benefits? its types and many more other questions will be answered in this article. Let’s understand in simple terms without going too deep into the technicalities.

What is insurance?

Insurance is a legal contract, which is mutually agreed upon between the two parties, the insured (we) and the insurer (company).

By this contract the policyholder agrees and warrants, that in case of future loss due to an unspecified event, you will indemnify in full. For that I will give a certain amount to the insurance company today. Also the Insurer agrees that if in future due to an unspecified event, I will indemnify in full, but if there is no loss, the amount paid by us will be completely goes to insurance company. When both parties agree to these conditions, the insurance contract is signed and the insurance policy is generate. This is what we call Insurance Policy.

The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.

Example for concept

Let’s take a small example to understand the concept, what is insurance.

➥ There is an insurance company and other side 100 general organization. Each organization among these, spends 1 crore worth of goods in transportation. But due to many reasons like accident, theft, spoilage of goods or any other calamity, every organization can suffer a loss of rupees 1 crore. So these organizations take an insurance for rupees 1 crore from above insurance company. For this these pays an amount of 1.50 lakhs (one and a half lakhs) i.e. Premium.

➥ So it’s a simple calculation that the insurance company collect 1.5 Crores from these 100 organizations. In case something happened with any 1 company, the insurance company is easily capable to gets compensation it. Insurance company already accumulated 1.5 crores, so it is easily paid out and 100 companies get relax as they get 1 crore insurance just paid by 1.5 lakhs.

Hope the insurance concept is well understood.
Define : Insurance is equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium.

Now let’s understand the types of insurance. (what is insurance)

Types of insurance

Mainly two types of insurance:
1) Life Insurance
2) General Insurance (General Insurance)

1) Life Insurance:

Everything is in the word only. Pertaining to human life. In this insurance the risk of your life is accepted.

Life insurance is a type of insurance that pays out a sum of money either on the death of the insured person or after a completion period of policy.

This insurance is provided for the financial security to the family. In today’s world of uncertainty, having life insurance is very essential.

Life insurance has different types, that will see in the next article, right now about what is insurance.
Nowadays, accident insurance and critical illness are also included with life insurance.

2) General Insurance:

All types of insurance except life insurance comes under the head of general insurance. Know more about what is insurance.

➥ Motor/ Vehicle Insurance,
➥ Health Insurance,
➥ Accidental Insurance
➥ Property Insurance,
➥ Travel Insurance,
➥ Corporate Insurance,
➥ Mobile Insurance

a) Vehicle Insurance:

Vehicle insurance, also known as car insurance or auto insurance or motor insurance. Due to increasing population, and increasing number of vehicles, the ratio of road accidents has increased manifold.

Vehicle insurance protects against financial loss due to sudden calamities like accidents. The cost of repairs of the vehicle is covered, as well as third-party damages.

Car insurance is mandatory by law, as per the rules of Indian government. (For more details will come here – what is insurance)

b) Health Insurance :

➥ Health insurance is purchased as a future provision for expensive medical expenses that you incur for your health care. In some developed countries, health insurance is provided by the government.
➥ It’s designed to protect us financially in the event of unexpected medical emergencies, as well as helping to pay for routine care.
➥ There are many different policies in this type of insurance. Like Individual health insurance, family health insurance, senior citizen insurance. We can also buy insurance policies for certain diseases.

The premium of this insurance policy includes hospital expenses, doctor’s fees, medicine expenses, various tests if required for treatment. In short total care of your health issues. Let’s know more about what is insurance.

c) Accidental Insurance:

➥ In this type of insurance we cover our accident risk only and only. In case of accidental death happened of the insured person, then then full sum assured is paid to the heirs of the insured. If something happened in accident, then it covers hospitalization and medical expenses of the insured person.

d) Property Insurance

➥ We all dream to have our own house, to have nice things in it. Property insurance protects our house, household goods, shop, shop goods or other property against possible loss due to natural calamities. It includes accidents to property such as fire, earthquake, flood, and other natural calamities. Still there is something left to know more about what is insurance, let’s go ahead.

e) Travel Insurance :

➥ This type of insurance covers the loss due to potential hazards during travel. In this the risk of life of person or transport of goods is accepted. This insurance is limited to one trip only. (what is insurance)

f) Corporate Insurance :

➥ This type of insurance is taken by large scale organizations. Out this insurance cover to protect their business against risks such as theft of commercial property, financial loss, employee health and accidents.

g) Mobile Insurance:

➥ This type of insurance, the mobile phone is compensated for the damage caused by the possible danger.

It covers the damage to the mobile due to falling into water, or any other accidents. In such cases, if mobile is not possible to repair or not able to repair, then the mobile is replaced with new one. (what is insurance)

What are the benefits of insurance?

➣ As above, the first benefit in different types of insurance is financial compensation for potential losses.
➢ Some big companies purchase health and life insurance for their workers to increase their morale and loyalty towards the company.
➣ Apart from the benefits of safety and security, another benefit is the exemption from income tax. As the insurance premium is paid according to the annual income of everyone, they are exempted from Income Tax.

Summary:

Thus in this article we will first cover life insurance, health insurance, general insurance and their sub types. You can buy insurance policy offline or online. Oftentimes, insurance agents help you purchase policies, mainly because they can help with claims processing.

There are also websites of insurance companies from which you can buy policies online. Before choosing and investing in an insurance policy, you should do your research, buy insurance only after being sure and certain.

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(what is insurance)