The Beginner's Guide to Insurance
Getting 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 understand what it is or why one must have it. For many Indians insurance is a form of investment or a superb tax saving avenue. Inquire an average person about his or her investments and they will proudly mention an insurance product as part of their core investments. Of the approximately 5% of Indians that are covered 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 witnessed such rampant mis. Marketing at the hands of agents who are over enthusiastic in selling products connecting insurance to investment making them fat commissions. General Insurance study material pdfJust what is Insurance?
Insurance is a way of distributing out significant financial risk of a person or business entity. To a big group of individuals or business entities in the occurrence of an unfortunate event that is predefined. The cost of being insured is the month to month or gross annual compensation paid to the company. In the purest form of insurance if the predetermined event does not occur until the period specified the money paid as settlement is not retrieved. Insurance 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
[caption id="attachment_14367" align="alignleft" width="300"]
insurance word on business folder showing risk management concept[/caption] Potentially any risk which can be quantified in conditions of money can be insured. To guard loved ones from damage of income due to immature death one can have a life insurance policy. To protect yourself and your family against unanticipated medical expenses you can opt for a Mediclaim policy. To safeguard your vehicle against robbery or destruction in accidents you could have a motor insurance policy. To safeguard your home against theft, damage due to open fire, flood and other perils you can find dating a home insurance policy.Most popular insurance kinds in India are life insurance, health insurance and motor insurance. Apart from these there are other forms as well which are discussed in short in the following sentences. The insurance sector is regulated and monitored by IRDA (Insurance Regulatory and Development Authority).
Life insurance coverage
This particular form of insurance provides cover against financial risk in the event of premature death of the insured. There are twenty four life insurance companies enjoying in this arena of which Life Insurance Corporation of India is a public sector company. There are several kinds of life insurance coverage policies the simplest form of which is expression 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 Company Ltd. New India Confidence Company Ltd, Oriental Insurance policy Company Ltd and Combined India Insurance carrier Ltd are in the public industry domain.
The biggest curry of non-life insurance in conditions of premiums underwritten is shared by engine insurance followed by engineering insurance and health insurance. Other kinds of insurance proposed by companies in India are home insurance, travel insurance, personal accident insurance, and business insurance.