What is insurance?
Definition: Insurance is an effective weapon to deal with the possibility of any loss in future. We do not know what will happen tomorrow, so we try to cover possible future losses through insurance policies. Insurance means protection from risk. If an insurance company insures a person, then the insurance company will compensate for the financial loss caused to that person.
Similarly, if the insurance company has insured a car, house or smartphone, then in case of breakage, breakage, loss or damage of that thing, the insurance company gives compensation to its owner according to the pre-determined condition. Insurance is actually a contract between the insurance company and the insured. Under this contract, the insurance company takes a fixed amount (premium) from the insured and compensates the insured or the company in case of any loss as per the terms of the policy.
How many types of insurance are there?
Insurance is generally of two types:
1. Life Insurance
2. General Insurance
1. Life Insurance: Life insurance means that on the death of the person who buys the insurance policy, his dependent gets compensation from the insurance company. In life insurance, the life of a person is insured.
If the head of the family dies untimely then it becomes difficult to run the household expenses. To save the wife/child/parents etc. of the head of the family from financial crisis, it is necessary to take a life insurance policy. In financial planning, first of all it is suggested to a person to buy a life insurance policy.
2. General insurance: General Insurance includes vehicle, house, animal, crop, health insurance etc.
Home Insurance: If you get your home insured from a general insurance company, then your home is protected in it. After buying the insurance policy, if there is any kind of damage to your house, then the insurance company pays for it.
Coverage against any kind of damage to your home is included in this insurance policy. Damage caused to the house due to natural calamity includes damage caused due to fire, earthquake, lightning, flood etc. Artificial calamity includes damage caused to the house due to theft, fire, fight-riot etc.
Motor Insurance: Insurance of any vehicle running on the road in India is very important according to the law. If you drive your vehicle on the road without insurance, then you can be fined by the traffic police. According to the motor or vehicle insurance policy, the insurance company pays compensation for any damage caused to the vehicle. If your vehicle is stolen or has met with an accident, then a vehicle insurance policy can help you a lot.
You get the most benefit of vehicle insurance policy when your vehicle has caused injury or death to a person. It is covered under Third Party Insurance. If you also have a two-wheeler/three-wheeler or a car, then it must be insured.
Health Insurance: Nowadays the cost of treatment is increasing very fast. On taking health insurance, the insurance company covers the cost of treatment in case of illness. Under the health insurance policy, the insurance company pays the amount spent on treatment in case of any kind of disease. The limit of expenses for any illness depends on your health insurance policy.
Travel Insurance: Travel insurance protects against loss during a trip. If a person goes abroad for some work or for a trip and he gets hurt or the goods are lost, then the insurance company compensates him. Travel insurance policy is valid only from the start of your journey till the end of the journey. Different insurance companies may have different conditions for travel insurance policy.
Crop Insurance: According to the current rules, it is necessary for every farmer who takes an agricultural loan to buy crop insurance. Under the crop insurance policy, the insurance company compensates the farmer for any kind of damage to the crop. Under the crop insurance policy, compensation is given by the insurance company if the crop is damaged due to fire, flood or due to any disease.
Due to the very strict condition of the crop insurance policy and not getting compensation according to the cost, there is not much enthusiasm among the farmers for crop insurance. In fact, to give compensation in case of crop damage, insurance companies survey all the fields around that farm and compensation is given only when most of the farmers' crops have been damaged.
Business Liability Insurance
Liability Insurance is actually meant to compensate for the loss caused to the customer by the work of a company or a product. In such a situation, the fine imposed on the company and the entire cost of legal proceedings has to be borne by the insurance company doing Liability Insurance.