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What is Insurance and What are the Types of Insurance?

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Do you know what insurance or insurance is? Why all of us are required to ensure our life or property, how many types of insurance or insurance are there. If you also have some doubts about insurance or insurance, you must read this post until the end because today we will know about all aspects of insurance.

As we all know, both death, disability, and waste surround the life and property of any human being. Nobody knows what is going to happen to them the next moment. At the same time, you can incur substantial financial losses due to such accidents. At the same time, insurance is a perfect way to protect yourself from such a situation, by which these risks can be overcome to a great extent.

The insurance company handles the entire responsibility of these risks through these insurance schemes. Insurance saves us from many troubles such as a fire in the house, car accident, and theft. While some types of insurance also provide money for treating your illness, you also offer this insurance amount to your family at the time of your death.

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Valid if you Insurance What happens to know more about when you’re reading the whole way this article insurance happens. With which you will get complete information about it. Then let’s start without delay.

What is insurance

Insurance is a kind of legal agreement between two parties: the first insurance company (who gives insurance or insurer) and the second is the individual (who takes insurance or insured).

The insurance company promises that if something untoward or unforeseen happens, the company must take responsibility for everything. At the same time, all the things that have been damaged will be completed by the company itself.

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These types of incidents are called contingencies because there is no cure for these events when they are going to happen. In this, the insurance company has to compensate for all the losses as promised earlier.

Principles of Insurance

When you buy insurance from the insurance company, then the insurer (which is the company) and insured (you) get a legal contract of insurance; it is called an insurance policy.

This insurance policy contains all the details you should know, such as all the conditions and circumstances under which the insurance company will pay you your insurance amount; if there is any loss, then if you have not, you have chosen Gone nominee.

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Insurance is a perfect way to protect yourself and your family from any financial loss. It has often been found that the larger the insurance cover, the smaller the premium. This is probably because very few people claim this type of insurance, but they have to pay all the premiums for it. Therefore, the company has more profit in it.

Any person or company can apply to get insurance, but this type of insurance company decides what type of insurance to provide. For this, the insurance company thoroughly evaluates your application before you make any decision. Most of the time, the company refuses to provide insurance to high-risk applicants.

With insurance, the point is that you have first to choose what you need insurance on.
After that, the insurer calculates his risk, and only after checking everything, tells you how much premium you will have to pay.

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1. Choose the policy

An insurance policy is such a document that you have all the details written about it. For example, for which things you get insurance and for which things you do not.

2. Make Premium Pay

According to your policy, the premium is called the amount you pay once every month or once a year. Its amount depends on what this insurance is covering.

3. Claim

If something untoward happens within the insurance period, you or your nominee can claim their insurance. You have to give full details of your accident that the insurance company checks, and if your claim is correct from all the places, you get your claimed amount as was decided earlier.

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What are the types of insurance?

Although there are many types of insurance, here we will learn about some essential types.

1. Life Insurance

As the name suggests, your life is insured in life insurance. You buy life insurance so that your family is not dependent on anyone even if you are not there and are financially secure.

Life insurance becomes very important for those people when you are the only one earning in your family, and the whole family depends on you.

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2. Health Insurance

Health insurance is taken to cover the expenses of medical treatments. There are also many types of health insurance policies that cover different diseases and ailments.
You can also take a general health insurance policy or accept a specific policy for a disease. The premium pay that is made in it covers all types of treatment, hospitalisation and medication costs.

3. Car Insurance

In the same way, you can ensure your car with Car Insurance. If any accident is to happen, then you get its compensation.

4. Education Insurance

In this insurance, you are depositing money for the proper education of your child, and when that time comes, you get a lump sum amount for the education of your child.

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5. Home Insurance

If you have built your house, you must buy home insurance because if it causes any damage to your home, whether it is fire, natural disaster or anything else, you get your compensation in everything.

Do you also get tax benefits from taking insurance?

There are other benefits of taking insurance, except safety, security benefits. You also get tax benefits from this.

  1. You can claim up to ₹ 1.5 lakh for Life insurance premium based on a tax-saving deduction under section 80C
  2. Medical insurance premium up to ₹ 25,000 for yourself and your family, while ₹25,000 for your parents, you can claim under a tax-saving deduction under section 80D

You have to make these claims at the time of filing e-filing income tax returns.

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How is Insurance Claim made?

Let us now know how you can claim your insurance amount.

  1. For this, you must first claim your insurance policy.
  2. Now you have to provide all the details regarding your loss that you have suffered. It differs from insurance to insurance.
  3. Then, you have to submit all the bills/proof of your damage, loss, hospitalisation, etc.
  4. Now your work ends here; directly, the insurance company will verify your claim.
  5. If your claim is proved correct, you get your claimed amount, according to your loss.

Insurance functions

Insurance has evolved at the cost of a process that protects people’s loss and uncertainty. It is described based on a social device in reducing the loss of life and property.

Insurance promotes general economic growth in the society so that the community can run appropriately with stability. Insurance industries develop financial institutions that later help to reduce uncertainties and risks.

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1. Provide Safety and Security

Insurance provides financial support and along with it also reduces uncertainties in business and human life. It provides safety and security against any particular event.
Since there is always the fear of sudden loss, insurance has a big hand in reducing it.

2. Generates financial resources

Insurance generates funds by collecting premium. These funds are invested in government securities and stocks. These funds are used in the country’s industrial development so that the country’s economic growth can be done. Employment opportunities also get a boost.

3. Life insurance promotes savings

Insurance not only protects you from risks and uncertainties but also provides an investment channel. Life insurance enables us to make systematic savings based on filling the regular premium. Life insurance also provides an investment mode.
It creates a habit of saving money in us. The lumpsum amount of premium that we get at the end of the matured amount at the time of maturity. That is why insurance encourages you to make savings.

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Definition of insurance

4. Promote economic growth:
Insurance generates a significant impact on our economy by mobilising domestic savings.
Insurance gives this accumulated capital as productive investments. It enables it to mitigate loss, promotes financial stability, promotes trade, and promotes trade and commerce activities, ultimately providing economic growth and development. Therefore, insurance plays a vital role in the sustainable growth of the economy.

5. Medical support:
Medical insurance is considered very important to manage the risk of heath. Because many of us can fall ill at any time, which can cost a lot. At the same time, if you have medical insurance, it covers your significant expenses, which can help you.

6. Spreading the
risk: Insurance helps in spreading our risk. With which it protects us from significant losses.

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7. Funds Collect a great source:
Significant funds can be easily collected by premium. These funds can be used in the country’s development, which leads to the country’s economic growth.

Benefits of Insurance

By the way, insurance provides many benefits to any individual, family, businessman, businesses, and society. Let us know about some of its essential advantages: –

1. Insurance provides economic and financial protection, insured person or thing that has been insured, that too in a nominal amount called the premium.
At the same time, it provides financial protection to the nominee if a pre-matured death of an insured person occurs. It also covers many losses, such as property loss due to theft, from a fire or any natural calamity.

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2. At the same time, it reduces the risks of people, which otherwise could have caused significant losses for them. Although it is not possible to altogether remove the risks and uncertainties, they can be significantly reduced. That is why the insurance company charges you a small premium to earn your risks.

3. It helps maintain the standard of living of the people if any such unexpected loss occurs. At the same time, it also protects us from the unfortunate financial crisis.

4. Since we have to pay some premium in insurance, it gives us an incentive to save, as saving becomes our habit.

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5. It protects us from being dependent on each other. So that you can live your life in your way and empower us, this life insurance policy gives us full financial support if someone dies.

6. It also provides help in taking a loan. If you have a policy going on, you can take a loan from the insurance company based on that policy. In which this policy is kept according to the collateral.

7. It provides new employment opportunities for all. In this modern era, hundreds of entrepreneurs and thousands of employees are engaged in this line.

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8. Promotes Foreign Trade. Insurance companies have a big hand in promoting international trade of a country. Because the insurance reduces the risks of these businesses, they can do the export activities they want.

9. Insurance companies have a big hand in making businesses operate smoothly. Because it leads to loss of properties. At the same time, the motivation of the employees is increased by the insurance of the employees by the company.

10. It helps in reducing inflation. To reduce inflation, the amount of money has to be reduced. While insurance companies take money from people at a premium, it helps to reduce inflation.

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11. These premium amounts are spent in many development areas such as trade and industry, leading to the country’s economic growth.

Loss of insurance

Know about the disadvantages of insurance.

  1. It does not compensate for all types of losses to favour insurance with people by insurance companies.
  2. Financial Compensation takes a lot of time to deliver as it has to go through lengthy legal formalities in between.
  3. Although insurance encourages savings, it does not provide the same facilities as the bank.
  4. They intentionally think to compensate the insurer at least so that their profit can be maximised.
  5. It also promotes crimes in society, as most beneficiaries want to get an insured amount of policy.
  6. Sometimes, the total amount of premium is more than the maturity amount.

Insurance

Whether it is insurance, life insurance, health insurance or any general insurance, you can buy this insurance policy offline or online. For example, offline, you can purchase insurance from insurance agents. Similarly you nowadays you can buy from many websites in online.

The most important thing is that you should do all the research on your behalf before choosing insurance because after changing insurance later, you may suffer loss.

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I hope you have liked this article about what is insurance. It has always been my endeavour to provide complete information about the type of insurance to the readers to contact any other sites. There is no need to search in the context of that article on the internet.

This will also save their time, and they will also get all the information in one place. If you have any doubts about this article or want some improvement, you can write low comments.

If you liked this post insurance or learned something, please post this post like Social Networks Share on Facebook, Google+ and Twitter, etc.

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Ashish Kumar Mishrahttps://www.spotnews18.com/
Ashish Kumar Mishra is the Founder and CEO at Spot News 18. He created Spot News 18 on 30 June 2019. His intention to make these News Websites was only to provide correct and official news to his readers. Now, he is working on Spot News 18 to expand his website reach to all parts of the world.

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