What is insurance? Insurance is an agreement by which a company provides you financial compensation for loss, damage, illness, or death. In return, you pay a specified premium on a periodic basis – monthly, quarterly, bi-annual or annual. Naturally, the amount you receive as payout – or the coverage - depends on the premium paid. The bigger the premium, the greater the benefits.
Why do I need insurance?
Having insurance helps you in many ways. It is mandatory in India to have vehicle insurance. It covers the damage done to the vehicle and the third party in case of any accident. Rising health cost mandates that you buy a health insurance or better, a family health insurance if you are married. Death is inevitable; hence buying life insurance becomes useful, as this would help provide for your family in case of your untimely death and loss of income, if you are the main breadwinner.
Kinds of Insurance
There are various kinds of insurance in India. Life insurance, health insurance and auto insurance are the most sought after policies in India. Listed below are some of the common insurance in India.
Life insurance: A life insurance policy is a contract between you and your insurance provider, where you pay a premium for a set period of time and in return your family will get a financial payout in case of your unfortunate demise.
Health insurance: Health insurance will help you tide over the expenses related to medical treatment and hospitalization. When you are in the hospital, at least you will not have to deal with the financial worry – it will be taken care of by your health insurance coverage.
Vehicle Insurance: Also referred to as auto insurance, car insurance, and motor insurance in India. Vehicle insurance basically protects you against financial loss in case of an accident, theft or natural disaster like fire, floods or landslides.
Vehicle insurance includes car insurance as well as two-wheeler insurance. Commercial Vehicles like buses, lorries and trucks are generally covered by Commercial Vehicle Insurance.
Property insurance: Property insurance or home insurance provides coverage against risks to property due to man-made or natural calamities like fire, weather damage, earthquake or theft to name a few.
Travel insurance: Travel insurance policies generally cover medical expense when you are travelling abroad. It can be availed to cover both long and short trips. These plans can also cover non-medical cost while traveling depending on the premium paid – for instance, paying for hotel accommodation and expenses in case of cancellation of flights or other untoward circumstances.
It is always a good thing to have insurance. It is especially advisable to have at least life insurance and health insurance (auto insurance is compulsory on purchasing a vehicle). In both cases, it is cheaper to buy the insurance when you are young and healthy rather than when you are older and the premium becomes more expensive. Buying insurance also buys peace of mind and it is one purchase you will never regret.