Insurance Guide for dummies

A new Beginner's Guide to Insurance

Obtaining the right kind of insurance is central to sound financial planning. A few of us may have some form of insurance policy but very few really understand what it is or why one must have it. For many Indians insurance policy is a form of investment or a superb tax saving avenue. Inquire the average person about his/her investments and they will proudly mention an insurance product as part of their core investments. Associated with the approximately 5% of Indians that are covered by insurance the proportion of those adequately insured is significantly lower. Very few of the insured view insurance as purely that. There is perhaps no other financial product that has witnessed such rampant mis. Selling at the hands of agents who are over enthusiastic in selling products backlinking insurance to investment generating them fat commissions. Insurance Guide for dummies

Just what is Insurance?

Insurance is a way of spreading out significant financial risk of a person or business entity. To a big group of individuals or business entities in the occurrence of an unfortunate event that is predetermined. The cost of being insured is the monthly or twelve-monthly compensation paid to the insurance company. Inside the purest form of insurance if the predetermined event does not take place until the period specified the amount of money paid as compensation is not retrieved. Insurance coverage is effectively a means of spreading risk among a pool of men and women who are insured and lighten up their financial burden in the event of a shock.

Types of Insurance policy

[caption id="attachment_14367" align="alignleft" width="300"] insurance word on business folder showing risk management concept[/caption] Potentially any risk which can be quantified in conditions involving can be insured. To protect loved ones from reduction of income due to immature death one can have a life insurance policy. To protect yourself and your family against unanticipated medical expenses you can opt for a Mediclaim policy. To safeguard your vehicle against robbery or damage in accidents you might have a motor insurance policy. To safeguard your home against robbery, damage due to open fire, flood and other perils you can find dating a home insurance policy.

Most popular insurance forms in India are life insurance, health insurance and motor insurance. Apart from these there are other forms as well which are discussed in short in the following sentences. The insurance sector is regulated and monitored by IRDA (Insurance Regulatory and Development Authority).

Life Insurance

This form of insurance provides cover against financial risk in the event of premature death of the insured. There are twenty-four life insurance companies actively playing in this arena of which Insurance coverage Corporation of India is a general public sector company. There are several kinds of life insurance policy policies the simplest form of which is term plan. The other complex policies are endowment plan, whole life plan, money back plan, ULIPs and annuities.

General Insurance

All other insurance policies besides Life Insurance fall under General Insurance. There are 24 general insurance companies in India of which 4 namely National Insurance Organization Ltd. New India Assurance Company Ltd, Oriental Insurance coverage Company Ltd and United India Insurance Company Ltd are in the public sector domain.

The biggest curry of non-life insurance in conditions of premiums underwritten is shared by electric motor insurance followed by architectural insurance and health insurance coverage. Other types of insurance proposed by companies in India are home insurance, travel insurance, personal accident insurance, and business insurance.