Insurance: Insurance means one of the contract between Insurance company (Insurer) and Individual (Policyholder) (Insured) .Under this contract you pay regular or monthly amount of money (as premium) to the Insurer and they will pay (Sum Assured) back to you or your nominee if any event occurred in your life.
Which types of events: It depends on you Insurance Policy like if you have life Insurance policy then event is unfortunate death (Demise) or any kind of loss or damages.
Nominee: Nominee means one of the owner of that policy in the absence of Policy Holder.
Means all sum assured will pay to your nominee if something wrong happen in your life like demise.
So please make sure Nominee is your close person who handle those things properly.
Components of Insurance:
1) Insurer
2) Insured
3) Premium
4) Policy Limit
How Insurance work:
As we know Insurance is legal agreement that binds both Insured & Insurer. Here policy nominee receive policy benefits from the insurer.
Insurance is a method by which you can protect yourself and your loved ones from facing financial crisis. You buy an insurance policy for the same, while insurance company takes the risk involved and offer insurance cover at the specific premium.
In case something happens wrongly in your life- then Insured or Nominee can file a claim with the Insurer. Based on the evaluation criteria for claims, the insurer reviews the claim application and settle the claims.
IRDAI : The Insurance Regulatory and Development Authority of India. It handles all Insurance companies & control their activities. In short it works like RBI (Reserve Bank of India). i.e. RBI= Banking sector. IRDAI = Insurance Sector.
Functions of IRDAI :
1) Issuing Certificate of Registration
2) Protecting interest of policy holders.
3) Issuing license to Agents
4) Promoting efficiency in Insurance Business.
5) Inspections , Conducting Enquiries on Insurance Companies.
Types of Insurance:
1) Life Insurance
2) Health Insurance
3) Motor Insurance
4) Property Insurance
5) Travel Insurance
6) Mobile Insurance
1) Life Insurance : In this Insurance you basically buy a policy that offers your insurance benefits when you are no more. Some policy gives benefits after set of period.
Types of Life Insurance:
a) Term Plan- Here beneficiary can avail the lumpsum only if policy holder dies during the policy tenure. No returns from this plan.
b) Endowment Plan- This policy provide lower insurance cover and also some returns if policy holder survival through the policy tenure. Its one type of investment plan. Drawback is returns are lower than other market plans like MF and provide low risk cover.
For more info about MF: https://www.uthubs.com/2021/02/mutual-fund-what-is-mutual-fund-mf.html
c) ULIP Plan: Unit Linked Insurance Plan - is specially designed for wealth creation and life protection offer dual benefits. Here premium divided into 2 parts like one is for life cover and second part is diverted into funds like MF, in equity or debts etc.
d) Whole Life Insurance : Its provide some flexibility to borrow against policy or withdrawal of cash at any time. It provide saving and protection.
e) Money Back Plan: It covers entire policy term , along with benefit.
f) Pension Plan: This types of Insurance provides some retirement benefits after specific time. You can also avail monthly income from this plan.
g) Child Plan: Its investment product - aimed to securing the future of a child.
2) Health Insurance: This type of insurance covers medical expenses that arise due to illness. This expenses covers your Hospitalization bills , Medical bills , Doctor consultant cost etc.
Coverage offered by Health Insurance :
Cashless Hospitalization - Under this type - policyholder avail benefits without making any payments. Here Insurance company have tie up with some hospitals and they pay directly to that hospital as per policy limit.
Reimbursement Hospitalization - Here policyholder is supposed to pay for their medical expenses initially and later apply for the repayment by the provider bases on bills and invoices.
Types of Health Insurance:
a) Individual Health Insurance: Normally its cover you, your spouse and 2 children's. You can also buy such type of insurance for your parents by providing some extra premiums.
b) Family Floater Health Insurance: If you want to cover all family members in single policy then you can go with such type of insurance.
c) Group Health Insurance : This policy is designed for a group of employees who work together.
d) Senior Citizens Health Insurance: This policy is designed for old people above the age of 60+ years.
e) Maternity Health Insurance: It cover all expenses during child delivery.
f) Critical Illness Insurance: This policy covers some list of major diseases like cancer, kidney failure etc.
g) Top-up Health Insurance: If you want higher amount of seek coverage then you can go with this insurance.
3) Motor Insurance: As name suggest it covers financial losses from accident and other losses. It also covers damages to third party and their property with own losses as well.
It is mandatory insurance.
Coverage offered by Motor Policy:
Third Party: It covers only damages & losses caused to third party person, vehicle or property.
Comprehensive: It covers third party liabilities and damages to your own vehicle as well.
Types of Motor Insurance :
a) Private Car Motor Insurance: Its your 4 wheeler car insurance which covers vehicle for damages against accidents , fire , theft etc.
b) Two Wheeler Insurance : Its your 2 wheeler insurance which covers vehicle for damages against accident ,fire, theft etc.
c) Commercial Vehicle Insurance: Its covers heavy vehicles like trucks, buses and their damages.
4) Property Insurance: This type of insurance covers your property or liability coverage for property owners. Property means your business or homes. It covers fire, flood ,earthquake etc.
Types of Property Insurance:
a) Homeowner Insurance: It covers your home.
b) Commercial Property Insurance : It covers your Business.
c) Flood Insurance: As name suggest it covers flood damages.
d) Natural Disaster Insurance: It covers earthquake.
5) Travel Insurance: This type of insurance protects your from certain financial risks and losses that can occur while travelling. For e.g. Last minute trip cancellation or medical emergencies etc.
Types of Travel Insurance:
a) Domestic Travel Insurance: Designed who travel within the country.
b) International Travel Insurance: Designed who travel Internationally.
c) Medical Travel Insurance: Designed to cover medical expenses or other health related concerns while traveling.
d) Group Travel Insurance: Designed for group of employees travelling abroad or anywhere for business purpose.
e) Senior Citizen Travel Insurance: Its specially designed for senior citizens whos age is more than 60.
f) Single and Multi trip Travel Insurance: It covers both medical as well as non medical expenses like delay in flights, baggage loss etc.
6) Mobile Insurance: This type of insurance covers damages of your mobile.
For e.g. lost , accidental damages etc.
Advantages & Disadvantages of Insurance:
Advantages:
1) Provide Economic Protection
2) Risk Sharing
3) Maintain standard of living
4) Encourage Saving
5) Eliminate Dependencies
6) Grant loan
7) Creates Employment Opportunities.
8) Helps to operate business smoothly
9) Help to develop Economy
Disadvantages:
1) It not cover all types of losses.
2) Lengthy legal formalities
3) Saving insurance does provide facilities like bank.
4) Sometime it increase the crimes to receive the insured amount.
5 ) Some policies premium is higher than amount receivable on maturity.
Tax Benefits :
1) Section 80C: It covers life insurance policies like Endowment, whole life, money back policies, Term insurance , ULIP etc.
2) Section 80D: It covers all types of Health Insurance.
Insurance is really needed?
Yes its really needed. Its protect you and your family. The main person in your family must have insurance. Its manage the risks, financial support to your family in the absence of you. At least one insurance is very important in your family which covers your future needs and goals.
Which Insurance is best for you ?
If you are the main person in your family then please buy below 2 insurance which protects you and your family from future damages.
1) Life Insurance: Buy one Term Plan - Its pure & low cost insurance but provide high sum assured amount. Nothing any returns from it.
2) Heath Insurance: Buy at least one Health insurance which covers you , your spouse, your children's & Parents. It is very important to avoid unexpected medical expenses.
If you are the single person in your life then don't buy any Insurance. 😅
How to Buy Insurance Policy:
You can buy Insurance policy either Online or Offline.
Online- little bit low premium + average service
Offline- Through any insurance adviser little bit high premium + good service (through agent) .
How to Become Insurance Advisor:
If you are interested to become a Insurance advisor then go through the below link:
For more better understanding please watch the below YouTube video:
Hope you clear each and every concept about Insurance. Thanks. 🙏
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