What is Insurance?
Insurance is basically a policy which an individual or an organization can take to protect themselves from possible eventuality.
Dictionary definition of insurance states that it is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specific loss, damage, illness as well as death in return for payment of a specific premium. Let’s dive into some basic terms related to our topic. Nowadays, Everyone is curious about the term Insurance how it functions? what are its benefits? why should we take it? and Where to go for a particular specific requirement in order to check exactly what we need? Before this all question you must know what is it and types of it.
In simple terms, it’s a risk management for a particular financial loss. Financial loss may be due to sickness or may be due to loss of some property, damage to vehicle or property and other loss which ultimately affects our financial status. There are many companies which provide such services. The agreement between the insurer and the person who is taking the benefits is called as policy. Different types of companies have different policies depending on the type and other factors.
In general, a policy means a statement or principle of action adopted or proposed by an individual as well as an organization on the other hand, an insurance policy is a contract between the insurer company and the policyholder. This policy determines the claims that Insurer company has to pay to the policy holder in return for the initial payment called premium. An insurance policy covers the details like.
- The exact duration of the coverage.
- Monthly Premium.
- Mode of premium payment
- Deductibles if any
- Puts cover into an effect
- Sets outs terms in which coverage has to be provided
- It also acts the legal evidence for insurance agreement
A policyholder can be an individual as well as an organization whose name policy is held.
An insurer is a company that pays the claims to the policyholder.
It is an amount of money that an individual or an organization has to pay in order to retain their policy. This premium is actually the earning for the insurer but of course, they have to provide coverage for the claims made for policies from this premiums only. A premium not only depends on the type of insurance but also depends on the type of policy an individual is choosing. It varies from policy to policy.
5.Components of Policy:
There are two components of the policy. Premium based as well as Deductible. At this point, everyone must understand how these works. A firm must follow this in order to make ways easy for their customer.Premium is simply a specific amount of price, which policy holder pays monthly to the insurer. The insurer company defines this premium. Premium is defined based on you or your business status as well as the present condition of the things for which you are supposed to be taking policy. if you are selecting a health or life policy. The premium is then defined based upon your current health condition. Worse the health condition more the premium.
Premium is simply a specific amount of price, which policy holder pays monthly to the insurer while the term in deductible is different. The insurer company defines this premium.However, Premium is defined based on you or your business status. if you are selecting a health or life policy. Different companies may have different premium for the same policy. The premium is defined based upon your current health condition.Worse the health condition more the premium. In fact, before you buy any policy you must compare them.
Now, Deductible means the amount which you pays from your pocket before the insurer pays you. Let’s understand from example. Suppose you have a policy of rupees 2lakh and the deductible is rupees 50,000 then after you pay this amount, The insurer will pay you rupees 1,50,000. This is the meaning of deductible in simple terms.
Insurance is still a very big domain to understand. However, there are some basic types which you must know. They are Life, Auto, Health, and Property. Nowadays there are also other new types as Flight, Disease, Life Insurance for kids, Mortgage Life Insurance, Accidental Death.
Types Of Insurance
Top 10 Insurer Companies in India
The companies are as mentioned below
- Life Insurance Corporation of India.
- HDFC Standard Life
- New India Assurance.
- ICICI Prudential Life.
- Tata AIG General.
- ICICI Lombard General.
- Bajaj Allianz General.
- Oriental Insurance.
- Birla Sun Life.
- IFFCO TOKIO General.
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