Insurance is an agreement between the insurance company and the insured to deal with the possibility of loss in future, protection against risk and cover the insured entity transfers the cost of a potential loss to another entity in exchange for small monetary compensation.

Under these agreements, the insurance company takes a certain premium from the insured person and pays a lump sum amount to an entity to safeguard itself from possible future losses. If an insurance company insures a person, then the insurance company will compensate the financial loss caused to that person. Thus, when there is a case of some misfortune, the insurer assists you in getting through the situation with terms of the policy.

In simple word, if the insurance company has insured a car, house or smartphone, then in case of break, loss or damage of that thing, the insurance company gives compensation to its owner according to the pre-determined condition.

*NOTE : An insurance premium is an amount that the insured has to pay to the insurance company from time to time in order to purchase a policy.*

Categories of Insurance

  1. Life Insurance
  2. Non-Life Insurance
  3. Re-Insurance

Life Insurance: Life insurance includes insurance on the death of the person who have bought the insurance policy and his dependent family will get compensation from the insurance company only with legal death certificate.

If the head of the family dies untimely, it becomes difficult to run the household expenses. It is necessary to take a life insurance policy to protect the wife/children/parents etc of the head of the family from financial crisis. In financial planning, first of all a person is suggested to buy a life insurance policy.

Types of Life Insurance

  • Whole Life Insurance
  • Endowment Life Insurance
  • Term Life Insurance

Non-Life Insurance: Non-Life insurance includes insurance of property against fire, theft etc., personal insurance such as accident and health insurance and liability insurance to cover legal liabilities. Other covers such as mistake and default insurance for professionals, credit insurance etc. are also covered under this.

Coverage against any damage to your home is included according insurance policy. Damage caused by natural calamity to the house includes damage due to fire, earthquake, lightning, flood etc. Artificial disaster includes damage to the house due to theft, fire, fighting-riots etc.

Types of Non-Life insurance

  • Fire Insurance
  • Vehicle Insurance
  • Marine Insurance
  • Engineering and Contractor’s Risk Insurance
  • Aviation Insurance
  • Miscellaneous Insurance

Re-Insurance: Reinsurance includes refers to insurance of life and non-life insurance companies, i.e. insurance companies transfer risk from one company to another in order to reduce the risk as they cannot bear the entire risk of the insurance covered by them.

Why do we need insurance ?

Life is full of surprises; some good, some bad. You need to be prepared for the worst that can come to you. It helps you to have a sense of security and peace. There can be many reasons where you may need help, such as a serious illness, natural disaster, unexpected death of loved ones, etc. Being adequately insured in such situations helps your financial position significantly. Thus, one should opt for a right type of security as per their needs.

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