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A new Beginner's Guide to Insurance

Having the right kind of insurance is central to sound financial planning. Several of us may have some form of insurance coverage but very few really determine what it is or why one must have it. For many Indians insurance coverage is a form of investment or a superb tax saving avenue. Ask 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 seen such rampant mis. Marketing at the hands of agents who are over enthusiastic to offer products backlinking insurance to investment earning them fat commissions. General Insurance of america claims

What is Insurance?

Insurance is a way of growing out significant financial risk of a person or business entity. To a sizable group of individuals or business entities in the occurrence of an unlucky event that is predefined. The cost of being insured is the month to month or total annual compensation paid to the insurance company. Within the purest form of insurance if the predefined event does not take place until the period specific the cash paid as compensation is not retrieved. Insurance coverage is effectively a means of spreading risk among a pool of individuals who are insured and lighten up their financial burden in the event of a shock.

Types of Insurance coverage

Potentially any risk which can be quantified in conditions of money can be insured. To safeguard loved ones from damage of income due to immature death one can have a life insurance policy. To protect yourself and your family against unexpected medical expenses you can opt for a Mediclaim policy. To protect your vehicle against robbery or harm in accidents you might have a motor insurance policy. To guard your home against fraud, damage due to fireplace, flood and other challenges you can choose a home insurance coverage.

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 sentences. The insurance sector is regulated and monitored by IRDA (Insurance Regulatory and Development Authority).

Life insurance coverage

This form of insurance provides cover against financial risk in the event of premature death of the insured. There are 24 life insurance companies playing in this arena of which Life Insurance Corporation of India is a general public sector company. There are several kinds of life insurance policies the simplest form of which is phrase plan. The other complicated policies are endowment plan, whole life plan, money back plan, ULIPs and annuities.

General Insurance

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 Business Ltd. New India Guarantee Company Ltd, Oriental Insurance policy Company Ltd and Usa India Insurance carrier Ltd are in the public field domain.

The biggest curry of non-life insurance in conditions of premiums underwritten is shared by electric motor insurance followed by architectural insurance and health insurance policy. Other kinds of insurance proposed by companies in India are home insurance, travel insurance, personal accident insurance, and business insurance.