A new Beginner's Guide to Insurance policy
Getting the right kind of insurance is central to sound financial planning. Several of us may have some form of insurance but very few really understand what it is or why one must have it. For the majority of Indians insurance is a form of investment or a superb tax saving avenue. Request a typical person about his or her investments and they will proudly mention an insurance policy product as part of their core investments. Associated with the approximately 5% of Indians that are covered by insurance the proportion of those adequately insured is significantly lower. Very few of the insured view insurance as purely that. There is perhaps no other financial product that has observed such rampant mis. Promoting at the hands of agents who are over enthusiastic in selling products connecting insurance to investment earning them fat commissions. General Insurance goodWhat is Insurance?
Insurance is a way of growing out significant financial risk of a person or business entity. To a big group of individuals or business entities in the occurrence of an unlucky event that is predetermined. The cost of being insured is the monthly or gross annual compensation paid to the insurance company. In the purest form of insurance if the predetermined event does not take place until the period particular the money paid as compensation is not retrieved. Insurance policy is effectively a means of spreading risk among a pool of men and women who are insured and lighten their financial burden in the event of a shock.
Types of Insurance coverage
[caption id="attachment_14367" align="alignleft" width="300"]
insurance word on business folder showing risk management concept[/caption] Potentially any risk that may be quantified in conditions of money can be insured. To guard loved ones from reduction of income due to immature death one can have a life insurance policy. To protect yourself and your family against unforeseen medical expenses you can opt for a Mediclaim policy. To safeguard your vehicle against robbery or destruction in accidents you might have a motor insurance policy. To safeguard your home against robbery, damage due to open fire, flood and other challenges you can find dating a home insurance policy.Most popular insurance types in India are life insurance, health insurance and motor insurance. Apart from these there are other forms as well which are discussed in brief in the following paragraphs. The insurance sector is regulated and monitored by IRDA (Insurance Regulatory and Development Authority).
Insurance coverage
This particular form of insurance provides cover against financial danger in the event of premature death of the insured. There are twenty four life insurance companies actively playing in this arena of which Life Insurance Corporation of India is a public sector company. There are several varieties of life insurance policies the simplest form of which is term plan. The other complex policies are endowment plan, whole life plan, money back plan, ULIPs and annuities.
General Insurance
Almost all other insurance policies besides Life Insurance fall under General Insurance. There are 24 general insurance companies in India of which 4 namely National Insurance Organization Ltd. New India Guarantee Company Ltd, Oriental Insurance Company Ltd and United India Insurance provider Ltd are in the public industry domain.
The biggest pie of non-life insurance in conditions of premiums underwritten is shared by electric motor insurance followed by executive insurance and health insurance policy. Other kinds of insurance proposed by companies in India are home insurance, travel cover, personal accident insurance, and business insurance.