Life is a roller coaster ride and is full of twists and turns. You cannot take anything for granted in life. Insurance policies are a safeguard against the uncertainties of life. Insurance is system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered.
What Is Insurance?
Insurance is a contract between two parties, the insurer or the
insurance company, and the insured, the person seeking the cover. Within
this contract, the insurer agrees to pay the insurer for financial
losses arising out of any unforeseen events or risk in return for a
regular payment of premium. Thus, these insurance plans are also called
as a Risk Cover Plans, which means to financially compensate for losses
that occur uncertainly through accident, illness, theft, natural
disaster. As you can not fight against these man-made and natural
calamities, so at least be prepared for them and their aftermath by
taking insurance policies.
Insurance - Kind of Investment
Insurance is an attractive option for investment but most people are
not aware of its advantages as an investment option. Remember that first
and foremost, insurance is about risk cover and protection. By buying
life insurance, you buy peace of mind. Insurance also serves as an
excellent tax saving mechanism. The Government of India has offered tax
incentives to life insurance products in order to facilitate the flow of
funds into productive assets.
Types of Insurance
Insurance policies cover the risk of life as well as other assets and
valuables, such as, home, automobiles, jewelry et al. On the basis of
the risk they cover, insurance policies can be classified into two
categories: Life Insurance and General Insurance. As the term suggests,
Life Insurance covers the risk involved in a person's life, while
General Insurance provides financial protection against unforeseen
events, like accident, flood, earthquake, disease, etc.
Insurance Regulatory &
Insurance Regulatory & Development Authority is regulatory and
development authority under Government of India in order to protect the
interests of the policyholders and to regulate, promote and ensure
orderly growth of the insurance industry.