Insurance is quite simply protection against the risk of potential significant financial loss in the future. Insurance is a way of buying financial peace of mind against the uncertainties and risks in life such as untimely death, loss of property, serious health issues requiring heavy expenditure and accidents among others.
Life insurance: Let’s take the example of one of the more popular types of insurance - life insurance. What does this mean to the individual in terms of loss and risk? If you are the main breadwinner and worried about your family’s ability to support themselves financially in case you die unexpectedly, you can take out a life insurance policy and name a family member as a beneficiary. In case of untimely death, a pre-fixed lump sum (the amount that you have been insured for) will be paid out to your beneficiary. You can choose this payment to be paid one time or on a recurring basis. Your dependents – spouse and children – can use this money for living, education or marriage expenses in case of your untimely death and loss of your earnings.
The premium can be paid on a regular basis - monthly, half yearly or annually. In certain cases, if the insured survives the tenure of the policy, he/she is eligible to receive a lump sum of money known as the Maturity Amount.
Health insurance: With medical bills rising steeply every day, you might be worried that in case of a medical emergency or serious medical condition, you will not be able to afford the expensive treatment. When you take out a health insurance policy, you can breathe easier knowing that your medical bills will be taken care of. Of course, the amount that you will receive depends on the particular policy you have bought, but in general, having insurance gives you some protection against potential financial loss in the future.
Health insurance is becoming increasingly popular in India because of the rapid increase in medical costs and hospital stays. Treatment for a major illness like cancer or heart disease can run into several lakhs of rupees depending on the city you live in and swallow a large part of your savings. Health insurance helps you plan and budget for such unexpected expenditures in the future.
Auto insurance: It is mandatory to have auto insurance in India and you will need to buy an insurance policy at the time you purchase your vehicle. Your insurance policy ensures that you are covered in case of damage or loss of your vehicle due to an accident, theft or natural calamity.
What are some of the more popular forms of insurance in India? Life insurance is one of the most popular forms of insurance in the country. Motor Vehicle insurance is mandatory and you will need to buy it at the time you purchase your vehicle. Health insurance is gaining popularity. You can also buy home insurance to protect yourself in case of loss of property due to theft, fire or other disasters.