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 What is Insurance? Types of Insurance

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Insurance is a legal agreement between the two parties i.e. the insurance company (insurer) and the person (insured). In this, the insurance company promises to reduce the losses of the insured after having insured contingency. It is often represented by an insurance policy, in which the insured gets financial protection from the insurer against the loss due to the occurrence of any incident, which is not controlled by the insured.

A contingency is an event that causes damage. This can be the loss of the policyholder’s death or property loss/destruction. This is called a contingency because there is uncertainty in relation to the incident. The insured pays a premium in exchange for the promise made by the insurer.

How does insurance work?

The insurer and the insured receive legal contracts for insurance, which is called an insurance policy. The insurance policy contains details about the conditions and circumstances under which the insurance company will pay the sum insured to the insured person or nominee.

Insurance is a way to protect yourself and your family from financial loss. Typically, in case of money paid for a large insurance cover, the premium is very low. The insurance company raises the risk of providing a high cover for small premiums because very few insured people actually claim insurance. That’s why you get insurance for a large amount at a lower cost.

Any person or company can take insurance from the insurance company, but the decision to provide insurance is at the discretion of the insurance company. The insurance company will evaluate the claim application for decision-making. Typically, insurance companies refuse to provide insurance to high-risk applicants.

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Types of Insurance

1. Life Insurance

Insurance covering the risk of a life of insurance is called life insurance. The nominee will receive the policy amount on the death of the insurer. It is also called assurance, because the event, i.e. the death of the insured, is certain. On maturity, the policy amount will be paid in one shot (one-time) or periodic installments. The biggest factor in getting life insurance is to provide those for whom you leave behind. This is extremely important if you have a family who depends on your salary. Experts suggest that life insurance should cover “ten times your annual income”. This amount will provide sufficient funds to cover current expenses, funeral expenses and give a financial pill to your family.

There are two basic types of life insurance are Traditional whole life and Term life insurance. Whole Life is a policy on which you die and Term Life is a policy for a set time. When planning your life insurance needs, you should consult a financial expert. There are considerable differences in both the policies. In the life insurance decide between the two policies, consumers should consider their age, occupation, number of dependent children and other factors to ensure that they have the necessary coverage for the safety of their families.

Health Insurance

Health insurance is purchased to cover medical costs for the expensive treatment. Different types of health insurance policies cover a range of diseases. You can buy a general health insurance policy as well as a policy for specific illnesses. The premium paid for the health insurance policy usually covers treatment, hospitalization, and the cost of the medication. It is important to buy a health insurance policy for yourself and your family because medical care is expensive, especially in the private sector. Being hospitalized can lead to a hole in your pocket and damage to your finances. It will be even more difficult, if the person who brings money, is now in the hospital bed. All this can be avoided only paying a small annual premium, which will reduce your stress in case of medical emergencies.

A good health insurance policy typically covers the costs of medical consultation fees, cost of medical tests, ambulance fees, hospitalization, and even hospitalization after a certain amount of time.

Home Insurance

Home insurance is one of those forms of property insurance that protect homeowners from home or property estate any losses. Home insurance additionally protects homeowners against any accident at home or on property.

Basic Home Insurance Policy Coverage “Coverage of home structure coverage, personal baggage coverage, liability coverage, and additional expenses, due to being temporarily unavailable to stay in the state of fire or other disasters is included.

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Accident Insurance

Accident Insurance helps with the accidental injury with medical and out-of-pocket expenses, whether it is an ambulance ride after a car accident, or a broken leg from a football game last weekend. It offers cash benefits directly to different types of services such as ambulance rides, hospital admissions, and fractures.

Accident insurance pays for coverage:

  • the initial care, such as an ambulance ride and an emergency room visit
  • Injuries like burning, wound, and fracture
  • Treatments like surgery and X-rays
  • Hospital care and medical care facilities
  • Follow-up care such as rehabilitation and imprisonment

Car Insurance

Car insurance (also known as auto or motor insurance) is used to protect your vehicle from unexpected risks. It basically provides protection against the consequences of indispensable examples. This helps in the prevention of theft, financial accidents and losses due to any subsequent liabilities.

The cover level of car insurance can be insured party, insured vehicle and third party (car and people). A premium of insurance is dependent on the value of the car, type of coverage, vehicle classification, on some parameters; Voluntary excess, etc. Car insurance gives the confidence to drive peacefully. In the event of an emergency, it works like a boon for the insured.

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