INSURANCE

What is Insurance

Insurance is an arrangement with an insurance firm under which you pay them regular amounts of money and they agree to cover your costs if a certain unfortunate event occurs,  for example a traffic accident, damage to property or illness. Insurance, however, may also be arranged for a common event, e.g. if you reach a certain age.  An event covered by insurance is referred to as an insurance event.  The person to whom such an event occurs or may occur is called the person insured.  When an insurance event occurs (you get ill, suffer an accident, reach a certain age), the insurer will pay you a certain amount of money referred to as an insurance benefit / claim paid.  The insurance benefit / claim paid will help you or your family to overcome the financial difficulties or increased costs that may arise from an insurance event.  This means that by arranging insurance you obtain insurance cover against a certain risk.

As any other service,  insurance is not provided free of charge. The insurer promises to pay you a benefit / claim amount as agreed in the insurance contract, upon the occurrence of an insurance event.  The price you are to pay for this service is the insurance premium.  The person who takes out an insurance policy and pays insurance premiums is called the policyholder.  The insurance premium is payable in monthly, quarterly or annual instalments as a rule, but it may also be paid in a single payment.

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Why Insurance is Important

Insurance plans are beneficial to anyone looking to protect their family, assets/property and themselves from financial risk/losses:

• Insurance plans will help you pay for medical emergencies, hospitalization, contraction of any illnesses and treatment, and medical care required in the future.

• The financial loss to the family due to unfortunate death of the sole earner can be covered by insurance plans. The family can also repay any debts like home loans or other debts which the person insured may have incurred in his/her lifetime.

• Insurance plans will help your family maintain their standard of living in case you are not around in the future. This will help them cover costs of running the household through the insurance lump sum payout. The insurance money will give your family some much needed breathing space along with coverage for all expenditure in case of death/accident/medical emergency of the policy holder.

• Insurance plans will help in protecting the future of your child in terms of his/her education. They will make sure that your children are financially secured while pursuing their dreams and ambitions without any compromises, even when you are not around.

• Many insurance plans come with savings and investment schemes along with regular coverage. These help in building wealth/savings for the future through regular investments . You pay premiums regularly and a portion of the same goes towards life coverage while the other portion goes towards either a savings plan or investment plan, whichever you choose based on your future goals and needs.

• Insurance helps protect your home in the event of any unforeseen calamity or damage. Your home insurance plan will help you get coverage for damages to your home and pay for the cost of repairs or rebuilding, whichever is needed. If you have coverage for valuables and items inside the house, then you can purchase replacement items with the insurance money.

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