Basic Information About Insurance

The life and property of an individual are surrounded by the risk of death, disability or destruction. These risks may result in financial losses. Insurance is a prudent way to transfer such risks to an insurance company.

Table of contents

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What is Insurance?

How does insurance work?

What are the types of insurance available in India?

Life insurance

Health insurance

Car insurance

Education Insurance

Home insurance

What are the tax benefits on insurance?

Conclusion

What is Insurance?

Insurance is a legal agreement between two parties i.e. the insurance company (insurer) and the individual (insured). In this, the insurance company promises to make good the losses of the insured on happening of the insured contingency. The contingency is the event which causes a loss. It can be the death of the policyholder or damage/destruction of the property. It’s called a contingency because there’s an uncertainty regarding happening of the event. The insured pays a premium in return for the promise made by the insurer.  

Insurance provides financial support to ensure that people can sustain and maintain stability in living standards against an unforeseen risk of losses. In insurance, people pay a certain amount of money for a fixed time or lifetime based on an agreement and this helps to develop a habit of saving money.

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