What is Insurance?
Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party happening of a certain event.
Insurance is a protection against a financial loss arising on the happening of an unexpected event. Insurance Companies collect premium to provide for this protection. A loss is paid out of this premium collected from the insuring public. The insurance Company act as a trustee to the amount collected through premium.
Insurance is generally classified in three main categories:
(i) Life (ii) Health (iii) General (iv) Car & Much more.
To get insurance an individual or an organisation can approach to an insurance Company directly, through Insurance Agent of the concerned company or through Intermediaries.
Benefits of Insurance
1. Safeguards oneself and one's family for future requirements
2. Peace of mind-in case of financial loss.
3. Encourage saving.
4. Tax rebate.
5. Protection from the claim made by creditors.
6. Security against a personal loan, housing loan or other types of loan.
7. Provide a protection cover to industries, agriculture, women and child.
Reasons for buying insurance
Insurance Buys Time and Money People like to refer to insurance as time insurance, the reason being that insurance proceeds are paid to the insured's beneficiaries in case of death or on the maturity of the policy. The money proffered by it helps buy time to adjust to the change of circumstances. Insurance provides large amounts of cash that will keep the lifestyle for the survivors the way it was before the insured's death.
Insurance Offers Peace of Mind For the person who buys an insurance policy, it offers absolute and complete peace of mind. He or she knows that the decision made by him will provide sound benefits in the future, whether or not the individual may live to see it. The life insurance policy will subsequently prove this in the future if and when funds are needed. This is the guarantee of the insurance contract.
Multiple Applications The future is uncertain for each and every one. No one knows how long he or she will live. The investment benefit is paid to the insured's beneficiaries after his death or it can be used during the life as well. Life insurance policy owners can turn to the cash value of the policy in case of a financial emergency when all avenues are either blocked or denied. They know that they can avail of loans based on their insurance policies.
The policy owners can use the cash value of their policies to meet their long-term financial needs as well. They may have purposefully invested in insurance to use the cash in the policy for their children's future marriage expenses or higher education fees.
Enduring Elasticity Since life insurance is flexible enough to serve several needs, the insured can keep several long-term goals in mind once he or she invests in the insurance plan. The cash value of the policy can be allocated towards augmenting the monthly income during the retirement years. Leisure years should be turned into pleasure years. Permanent life insurance is designed on the concepts of long-term flexibility.
Financial Security The insurance policy offers contractual guarantees to people looking for peace of mind when they buy life insurance. Life insurance offers complete financial security. The purchase of life insurance demonstrates concern for a family's future financial well being.
Regard for Family The purchase of life insurance clearly displays care and concern for the people the policy owner loves.
Insurance is Safer No financial institution can do what life insurance does. No industry can back its products with reserves and surplus as sound as those of the insurance industry.
The proof of strength and safety that insurance companies have ensured even under the most adverse of conditions is a matter of pride for the entire insurance industry. For generation after generation, life insurance has been acclaimed as the very benchmark of security against which the other industries are measured.
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