Guide on Insurance and takaful

The Beginner's Guide to Insurance coverage

Obtaining the right kind of insurance is central to sound financial planning. Several of us may have some form of insurance policy but very few really determine what it is or why one must have it. For the majority of Indians insurance policy is a form of investment or a superb tax saving avenue. Inquire an average person about his/her investments and they will proudly mention an insurance coverage 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 in selling products linking insurance to investment earning them fat commissions. Guide on Insurance and takaful

What is Insurance?

Insurance is a way of distributing out significant financial chance of a person or business entity. To a sizable group of individuals or business entities in the occurrence of an unfortunate event that is predetermined. The cost of being insured is the month to month or total annual compensation paid to the company. In the purest form of insurance if the predefined event does not occur until the period specified the cash paid as payment is not retrieved. Insurance coverage is effectively a means of spreading risk among a pool of folks who are insured and brighten their financial burden in the event of a shock.

Types of Insurance policy

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

Most popular insurance forms 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

This form of insurance provides cover against financial chance in the event of premature death of the insured. There are 24 life insurance companies playing in this arena of which Life insurance coverage Corporation of India is a public sector company. There are several types of life insurance policy policies the simplest form of which is phrase plan. The other intricate 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 Confidence Company Ltd, Oriental Insurance policy Company Ltd and United India Insurance Company Ltd are in the public sector domain.

The biggest pie of non-life insurance in conditions of premiums underwritten is shared by engine insurance followed by engineering 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.