What is an Insurance policy

Insurance : Definition, Benefits and Types

What is insurance? 

Insurance is a financial tool that saves people from emergency expenses. It protects an individual and their family from uncertain emergencies in the future. The most important feature in the insurance concept is that insurance firm supports the policyholder with financial aid in the much-needed situation. The policyholder has to pay a premium amount, and in return, there is a huge amount given to the beneficiary. Insurance is a legal agreement made between an individual and the policy insurance company. Even though there is a huge number of policies available in the market, the individual can choose one based on their specifications about the investment. 

There are several uncertainty factors attached in life that can lead to losses. Emotional losses can take time but can be healed, but monetary emergencies aren’t the same. It needs an immediate cure to settle the situation. Insurance policies can support by reducing the impact of the situation in any form; there is a definite possibility.

The different insurance policy types serve specific needs. Each aspect of life can have an insurance policy available to use. On the event of insurance policy usage, the claim can be made easy and quick. 

Why should you buy Insurance policies? 

There are multiple benefits in having an insurance policy. The below given are the advantages, 

Risk management – The future is unpredictable, and insurance policy can considerably reduce the impact of any uncertain situation. Insurance policies act as a third hand to help emergency situations. A small premium paid can be a huge step taken by an individual when looked back from the future. 

Standard of living – When the family head, who is in charge of the family’s growth suddenly passes away, then there is a definite steep downfall in the family’s living status and growth. To prevent such a fall, people should buy insurance policies according to their need and requirement. 

Savings – Saving a lot of money can be used to build a constructive future. Insurance is a great saving option, not just a savings but the return is better than the investment. The culture of insurance has actually even more raised the importance of savings in India. 

Loan – There are several benefits of purchasing insurance policy under an insurance firm. Certain financial organisations provide loan-related benefits for the policyholder. 

Tax benefits – For a certain type of insurance, the premium paid is eligible for tax deductions. Thus it is a safer and economical option for investors. 

 Types of Insurance Policies 

 1.Life insurance 

Life insurance protects the nominee after the policyholder’s death. The policyholder has to pay a premium amount when required in order to activate the policy, only then the death benefit will be settled. 

2.Health insurance 

Health insurance is a policy that supports the policyholder with the cover on any financial expenses related to the policyholder. There are several types of health insurance policies that can be used in several medical situations. The insurance firms have a set of recommended hospitals which are called network hospitals. The policyholder can enjoy the benefits of cashless transactions from these hospitals. The individual can also opt for the reimbursement method of claim. In this method, one has to pay for the treatment from their own pocket, undergo the treatment and later submit the bills to the insurance firm for the claim. 

3.Liability insurance 

With the Liability insurance policy, one can safeguard their properties. It includes a car, bike, home, and many more. The policy has a specific tenure and can be renewed easily.

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