What is Insurance?
Insurance is the act by which the insurance company agrees to compensate the Insurer in case of a loss or damage. Insurance companies tend to pay for financial losses that arise due to the occurrence of the insured events. It contains various principles that the insured considers when they are taking an insurance contract. They include Insurable Interest, Utmost Good Faith, Proximate cause, Indemnity, Subrogation, loss minimization, and contribution.
Benefits of Insurance.
1. Enhances safety and security
Insurance provides security of events like fire and accidents when they occur; they ensure the safeguarding of properties that get destroyed from such events and provides covers for all the damages that might occur. These ensure that the affected get compensated for the damage they suffer from catastrophies.
2. Pension plans provide for income security during old age
Insurance is a perfect fall back position when you are old, weak, and no longer in a position to work. It gives you a regular income to meet your needs.
3. The insured get tax benefits for the amount of premium paid
The amount of tax benefits one gets is directly dependent on the amount of premium paid. These benefits are realizable within the confine of insurance.
4. It encourages saving, as in the case of life insurance
Those with negative saving attitudes, through life insurance, have learned to be more prudent in spending.
Types of Insurance.
There are two significant types of insurance. They include:
- Life Insurance
- General Insurance
It is a type of Insurance that offers compensation in case of death or disability. Life insurance provides financial support for a specific period or over the lifetime of the client according to the terms and policies of the contract. The family of the deceased receives compensation from the insurer after the retirement of the insured or incase of his death.
The insured provides payments to the insurer to create agreements on how long the contract will last. The premiums paid to the insured vary with the period the contract will expire.
Life insurance is classified into:
This type of life insurance houses a contract for a specified period. The contract expires when the period comes into completion. The family of the insured receives money when death occurs. If the insured survives the agreement, no payment will go to the family nor the insured. Term insurance also comes with some interest that accrues with time during the premiums payment’s period. This type of policy ensures your family is not left in a financial crisis when you are not there. They can adjust their living with what you had invested for them.
This type of insurance is valid for a specific period, agreed on by both the insurer and the insured. Premiums are paid within this period after which they are later refunded to you upon its completion. This is more of a fixed deposit savings account, which is a bad policy to help you empower yourself to become financially stable.
In this type of insurance, you get a percentage of the sum assured time to time throughout the period as survival benefit. After the term matures, the insurer pays back the remaining amount. In case of death, your family is paid the whole sum assured, regardless of the survival benefits made before.
Unit-linked Insurance Plans (ULIPs)
This acts as an investment and a cover too. This is because a part of your premium caters for your protection, and the rest gets invested to debt and Equity. In the event of your death, your family gets paid, in lump-sum, the sum assured.
It is a plan that helps you build on your retirement fund when you are still active and energetic. When you retire, your sum gets delivered to you through regular installments and in case of death, your family will be compensated.
This policy investment helps safeguard the financial future of your children. In case of your demise, your children will be compensated a lump-sum amount, and they will also get a specified amount of money at specific intervals.
Life insurance ,in some countries, has some tax benefits as the amount you pay as your premiums could have been deducted from your total taxable income. This acts as a benefit to you as the insured.
Itoffers protection for all your assets or properties against loss, damage, theft, and other liabilities. It includes all risks expect death. We’re talking;
Liability Insurance, and many more.
Here, you insure your properties against a specific risk. The risks may vary from fire, theft, and/or goods damaged.
You buy a health insurance cover to care for your medical cost for expensive healthcare treatments. Some policies cater to various health conditions and demands. You can buy a general plan or a specific one for a particular situation or disease. The premium paid for a health insurance policy usually covers treatment, hospitalization, and medication costs.
This insurance protects you mostly from an accident and related cases. You can also cover your car from natural calamities like floods and earthquarkes and create a third-party policy to pay other vehicles on your behalf.
This insurance compensates you for any financial liabilities arising out of medical and non-medical emergencies during your travel abroad or within the country. It covers;loss of baggage, emergency medical expenses, hijacking, delayed flights, and accidental death.
As we conclude, you can buy an insurance policy offline as well as online whether life insurance, health insurance, or general insurance. There are insurance agents that can help you buy an insurance cover, as well as websites that you can get all the information you need on the same. Always ensure that you have done your research before settling and investing in a specific insurance policy.