Insurance is a legal agreement made between two parties i.e. the insurer and the insured. Through this, the insurance provider agrees to resolve the insured’s damages upon an event of an insured contingency.
The occurrence that triggers a loss is contingency. This could be the policyholder ‘s death or property damage/destruction. This is called a risk since there is confusion regarding the events occurring. The policyholder pays a premium in exchange for the Insurance.
Insurance is a way of protecting against financial loss. This is a type of risk management, used mainly for hedging against the risk of a potential or uncertain loss.
An agency that offers insurance is known as an insurer, insurance provider, or underwriter. An insured individual or company that purchases insurance is known as an insured individual or a policyholder. The insurance agreement entails the insured accepting a comparatively small fixed and documented risk in the form of payment to the insurer in return for the insurer’s commitment to reimburse the insured in the case of a covered injury. The loss may or may not be material, but it must be reducible to financial terms, and typically includes something in which the insured has an insurable interest held by ownership, possession, or pre-existing relationship.
The insured person receives a document, called the insurance policy, detailing the terms and situations under which the insurer must pay the insured. The amount of money paid to the policyholder by the insurer for the coverage provided for in the insurance policy is called the premium. If the insured suffers a loss that is theoretically protected by the insurance policy, the insured submits a report by a claims adjuster to the insurer for processing. Through taking out reinsurance, the insurer may mitigate its own risk, whereby another insurance provider offers to bear some of the risks, particularly if the primary insurer finds the risk too high for it to handle.
Components of Insurance Policy
It is necessary to consider how insurance functions when choosing a policy.
A strong understanding of these principles helps you select the policy which best fits your needs. Most insurance plans have three components (premium, policy amount, and deductible).
The premium of a policy is its price which is typically expressed as a monthly cost. The insurer calculates the premium based on the risk profile of your or your company which may involve creditworthiness.
The premium limit is the maximum amount in which an insurer can pay for a covered loss under a premium.
Higher limits usually bear higher premiums. The maximum amount premium paid for a general insurance policy is referred to as the face value and is the amount charged to a survivor upon the insured’s death.
How Insurance Work?
The insurer and the covered insured person have a valid insurance plan, which is called the insurance policy. The insurance policy includes descriptions of conditions and situations in which either the covered person or the candidates will be paid out the insurance sum.
Insurance is a way to protect yourself and your family against financial failure. The premium for a broad insurance policy is usually much less in terms of money charged. The insurance provider is taking this risk by offering a large cover with a low premium because very few covered individuals actually end up claiming the policy. For this reason, you get premiums at a small price for a significant sum.
When the Insured person or his relatives fill the claim form claim settlement is done according to the validity of the Insurance Policy. This process is known as the claim settlement process.
Types of Insurance in India
In India insurance can be broadly classified into the following categories:
Life insurance offers a Life Cover. You buy life insurance to ensure that your dependents are financially protected in case of your untimely death. Life insurance is particularly relevant if you are your family’s primary breadwinner, or if your family is heavily dependent on your income. Under life insurance, the family of the policyholder shall be compensated financially in the event the policyholder dies within the policy term.
Health insurance is purchased to cover the cost of costly treatments. Health insurance policies cover a various conditions. One can purchase both a general health insurance policy and limited disease plans. The fee paid to a health insurance company usually covers costs of diagnosis, hospitalization, and medication.
A car insurance policy is an important policy for any car owner in today’s world. This insurance protects you from undesirable events such as accidents. In addition, certain plans account for damage to your vehicle during natural calamities such as flooding or earthquakes. It also protects third party responsibility where other car owners have to face damages.
The child education cover is similar to a life insurance policy and has been developed primarily as a saving device. An education plan can be a perfect way to have a lump sum of money when your child hits the age of higher education and receives college admission (18 years and older). Then, this fund can be used to pay for higher education expenses for your kids. Under this scheme, the child is the life insured, or the fundholder, while the policy owner is the parent / legal guardian.
We all dream to own our own houses. Home insurance may help to cover loss or damage caused to your home by accidents such as fire and other natural or hazardous calamities. Home insurance covers other events such as storms, earthquakes, etc.
Tax Benefits in Insurance
Besides the health and protection advantages of buying insurance, there are also the income tax benefits that can make use of.
Under Section 80C, life insurance premium of up to 1.5 lakh can be claimed as a tax-saving deduction
A health insurance premium of up to 25,000 for you and your children and up to 25,000 for your parents as a tax-saving allowance under Section 80D
Such statements must be made at the time the income tax returns are e-filed.
List of Life Insurance Companies in India
|1||Life Insurance Corporation of India||1956|
|2||HDFC Standard Life Insurance Co. Ltd.||2000|
|3||Max Life Insurance Co. Ltd.||2000|
|4||ICICI Prudential Life Insurance Co. Ltd.||2000|
|5||Kotak Mahindra Life Insurance Co. Ltd.||2001|
|6||Aditya Birla Sun Life Insurance Co. Ltd.||2000|
|7||TATA AIA Life Insurance Co. Ltd.||2001|
|8||SBI Life Insurance Co. Ltd.||2001|
|9||Exide Life Insurance Co. Ltd.||2001|
|10||Bajaj Allianz Life Insurance Co. Ltd.||2001|
|11||PNB MetLife India Insurance Co. Ltd.||2001|
|12||Reliance Nippon Life Insurance Company||2001|
|13||Aviva Life Insurance Company India Ltd.||2002|
|14||Sahara India Life Insurance Co. Ltd.||2004|
|15||Shriram Life Insurance Co. Ltd.||2005|
|16||Bharti AXA Life Insurance Co. Ltd.||2008|
|17||Future Generali India Life Insurance Co. Ltd.||2007|
|18||IDBI Federal Life Insurance Co. Ltd.||2008|
|19||Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.||2008|
|20||Aegon Life Insurance Co. Ltd.||2008|
|21||Pramerica Life Insurance Co. Ltd.||2008|
|22||Star Union Dai-Ichi Life Insurance Co. Ltd.||2008|
|23||IndiaFirst Life Insurance Co. Ltd.||2009|
|24||Edelweiss Tokio Life Insurance Co. Ltd.||2011|
You can purchase an insurance policy offline as well as online, whether it be life insurance, health insurance or general insurance. T here are insurance agents who can help you purchase a policy, so there are websites from which you can buy a policy. Make sure you have done your research before choosing an insurance policy and investing in it.
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