What is Insurance – Types of Insurance & Easy Guide 2022

Hello friends, here we are going to know about insurance, what is insurance and what are the types of insurance, why it is important to get insurance. And everything you need to know about insurance.

We all have heard about investments like property, gold, the stock market, and many other types of investments.

The purpose of all these is the same in the future, there will be an economic benefit due to an increase in their value, and by selling them in bad times, the needs can be met or the problem can be solved.

In today’s time, insurance has also become a very good investment option from the point of view of investment and security, you must have heard people saying that if nothing else, get insurance only.

So let us know what is insurance and how many types of insurance are there, why it is important to get insurance.

What is Insurance?

Insurance is a way to avoid and cover future uncertainties, risks, or any potential economic, life, or health-related loss.

The life of all of us is full of uncertainties, we do not know what is going to happen in the coming time, these uncertainties are insured to reduce the risks.

So that if there is any kind of loss in the future then it can be compensated and we do not have any kind of financial burden.

Insurance is a contract (agreement) between two parties (insured and insured) with certain terms and conditions stipulated in this contract.

What if the person insured suffers the insured property, health, or life (death) in the future, the insured shall pay the sum of the insurance contract to that person or his family.

Underinsurance, the insurer deposits the premium of insurance to the insurance company for the period of insurance or for a predetermined time limit and according to the terms of the insurance, the insurance company compensates the insured in case of any loss.

How does insurance work?

In insurance, the person insured tells the insurance company about the type of insurance he wants to take and gives information about that property.

Then the insurance company tells him about the plan of insurance, amount of insurance, terms, and premiums, etc., and if the insurer agrees to them.

So a contract is made between them, in which all the conditions etc. have been told, then on the basis of that, the insurer pays the installments of the insurance.

And in case of any future loss to the insured, the insurance company (as per the terms of the contract) compensates for his loss.

Why is it necessary to have insurance?

There will definitely be a question in your mind that if we are healthy, all our things like house, car, etc. are fine, then why is it necessary to get insurance or why should we get insurance.

Friends, today everything is fine, but we do not know what will happen tomorrow, you must have seen many times that people suffer a lot due to floods, earthquakes, accidents, diseases, fire, theft, etc.

And if something happens to the head of the household in all this, then the whole family gets into trouble, it becomes very difficult for them to run the household expenses, raise the children.

In all these situations, if you have insured yourself and your properties, then the insurance company pays for any kind of loss and there is no financial burden on you.

And if something happens to the head of the household, then the insurance company pays the sum insured to their family members, which helps their family a lot financially and gives them support for further life.

So now you must have understood what is insurance and why it is necessary to get insurance, let us now know how many types of insurance are there.

What are the types of insurance?

There are mainly two types of insurance =>

  • Life Insurance
  • General Insurance
  • Let us know about them in detail.

Life Insurance

Life insurance is the insurance that is done to provide financial support to the insured against the uncertainties and risks of life such as death, permanent disability, etc.

The purpose of life insurance is to provide financial assistance to the family of the insured in the event of the death of the insured.

You must have seen many times that due to any natural or artificial calamity or accident in the family of people, when their head or the person who bears the financial burden of the household dies, their family faces double trouble.

One is the death of an important member of the house and then the financial crisis at home, sometimes it becomes difficult for them to meet their food and drink needs.

In such a situation, if he has taken life insurance, then his family starts getting the full amount of insurance or monthly installments (according to the terms of insurance) in one go so that he does not face any financial crisis.

That’s why we must have life insurance. There are also five types of life insurance =>

Term life insurance plan

In this type of life insurance, life cover is provided for a fixed time limit, if the insured dies due to any reason during that period, then the sum assured is provided to his family.

And if the insured does not die during that period, then he or his family does not get anything, hence the premium (installment) of the term plan is very less as compared to other insurance plans.

Whole life insurance

As the name suggests, this insurance is for the whole life and in this, the entire life of the insured is covered and the sum assured is provided to the family members of the insured on the death of the insured.

Endowment Plan

An endowment insurance plan is a different type of insurance plan in which the insured gets the insurance maturity benefit on completion of the term of the insurance.

That is if the insured does not die till the end of the term of insurance, then he is given the maturity amount of insurance and if he dies during the period then the sum assured is provided to his family.

The premium of this insurance plan is also high due to both the covers being provided.

Unit Linked Insurance Plan (ULIP)

Unit Linked Insurance Plan is a combination of both insurance and investment, in which a fixed sum assured is provided on the maturity or death of the insured, and at the same time, the insured can also choose to invest in the stock market.

Money-back policy

A money-back policy is similar to an endowment plan, but in this, the insured gets a fixed amount out of the sum assured during the term of the policy, and the balance amount is paid at the end of the term.

And if the insured person dies before the completion of the term of insurance, then the entire sum assured is provided to his family members.

General Insurance

Apart from life insurance, all the types of insurance plans are there, they all come under general insurance like =>

Let us now know about them in detail.

Home Insurance

Our home is very important to us because we have many sour and sweet memories associated with it, but with time it becomes old and starts to break down.

There is a possibility of breaking, falling, or damage to our house due to flood, earthquake, fire, war riots, terrorist attack, and many other hazards, so home insurance is done.

The purpose of ensuring the house is to provide protection against any kind of damage to the house in the future, in case of any kind of damage to the house due to insuring the house, the insurance company compensates for it.

Motor Insurance

Vehicle insurance is done to avoid, protect and compensate for the loss due to possible incidents like theft or accident of the vehicle.

In our country, it is mandatory to ensure the vehicle whether it is a two-wheeler, three-wheeler, car, or whatever vehicle you have, you must have seen that the traffic police also collect fines from those who do not have insurance for their vehicle.

Getting vehicle insurance becomes most beneficial when someone gets hurt or dies in an accident with your vehicle,

In such a situation, the insurance company settles the matter under third-party insurance and you do not have to face any problems.

Health Insurance

In today’s time, health problems (diseases) and their expenses have increased a lot, the cost of treatment of many diseases is in lakhs and many poor families are drowned in debts due to these diseases.

Health insurance provides you financial protection for every type of disease, in any of your diseases, the entire cost of hospital and treatment is borne by the insurance company (the amount insured and the diseases for which it is covered).

Keep in mind that the benefit of the insurance policy is available only in the hospitals that are affiliated with the insurance policy.

Accident Insurance

Even without wanting, there comes a time in everyone’s life when he has to face some accident, you must have read about some accident in the newspaper every day.

Sometimes accidents are so serious that people become permanently disabled or die, that’s why people also get accident insurance.

If a person has got his personal accident insurance, then in case of an accident, the cost of treatment is borne by the insurance company.

Travel Insurance

This is also a type of general insurance, people are traveling somewhere or the other. They live and also ensure their travel, the term of this insurance is from the start of your journey till the end.

In this, the insurance company pays for any kind of injury or theft or any kind of loss during the journey.

Crop Insurance

Crop insurance is also a type of general insurance that is done for the purpose of protecting the crop and reducing the risk to the farmers.

Agriculture insurance is beneficial for the farmers but due to its strict terms and conditions, farmers do not take much interest in it.

There is also a reason for this if your crop is bad then the insurance company checks the crops of all the nearby fields and if everyone’s crop is bad,

If everyone’s crop is affected by its disease or due to crop failure, only then do you get the amount of insurance.

Business Liability Insurance

Business liability insurance covers damages caused to a customer due to the performance of your business or a product.

Many times such a situation comes that even if a customer does not want to suffer any kind of loss, then in such a situation, the insurance company bears the full cost of the fine and legal proceedings on the businessman or the company.

Here we have tried to tell everything about insurance like what is insurance and what are the types of insurance, why it is important to get insurance.

If you have any other questions related to insurance, then you must tell us in the comment section, we will be very happy to answer your questions.

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