What is insurance, what are its types?
Insurance is an effective tool to deal with the possibility of loss in future. We do not know what will happen tomorrow, so we try to cover the possible loss in future through an insurance policy.
Insurance means protection against risk. If an insurance company insures a person, then the insurance company will compensate the financial loss caused to that person.
Similarly, if the insurance company has insured a car, house or smartphone, then in case of break, break, 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 person and pays compensation to the insured person or company in case of any loss as per the terms of the policy.
How many types of insurance are there?
Generally there are two types of insurance:
In life insurance, the life of a person is insured.
Life insurance means that on the death of the person buying the insurance policy, his dependent gets compensation from the insurance company.
If the head of the family dies untimely, it becomes difficult to run the household expenses. It is necessary to take a life insurance policy to protect the wife/children/parents etc. of the head of the family from financial crisis. In financial planning, first of all a person is suggested to buy a life insurance policy.
General insurance includes all vehicles, houses, animals, crops, health insurance etc.
If you insure your house with a general insurance company, then your home is protected in this. After buying an insurance policy, if there is any kind of damage to your house, then the insurance company gives the damages .
Coverage against any damage to your home is included in this insurance policy. The damage caused by natural calamity to the house includes damage due to fire, earthquake, lightning, flood etc. Artificial disaster includes damage to the house due to theft, fire, fighting-riots etc.
In India, it is very important to insure any vehicle plying on the road according to the law. If you drive your vehicle on the road without insuring it, then the traffic police can fine you. According to the motor or vehicle insurance policy, the insurance company gives compensation for any damage caused to the vehicle. If your vehicle is stolen or due to an accident, then a vehicle insurance policy can help you a lot.
You get the most benefit of a 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 car, then it must be insured.
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 the treatment of any kind of disease. The limit of expenditure on any illness depends on your health insurance policy.
Travel insurance protects against loss during a trip. If a person goes abroad for some work or for travel and he gets hurt or the goods are lost, then the insurance company gives him compensation. Travel insurance policy is valid from the beginning of your journey till the end of your journey. Different insurance companies may have different conditions for travel insurance policies. ⤵️
According to the existing rules, it is necessary for every farmer who has taken an agricultural loan to buy crop insurance. Under the crop insurance policy, in case of any damage to the crop, the insurance company gives compensation to the farmer. Under the crop insurance policy, compensation is given by the insurance company in case of crop failure due to fire, flood or due to any disease.
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Due to the strict conditions of the crop insurance policy and not getting compensation according to the cost, there is not much enthusiasm among the farmers about crop insurance. In fact, in order to give compensation in case of crop failure, insurance companies survey all the fields around that farm and compensation is given only when the crop of most of the farmers is damaged.
Business Liability Insurance:
Liability Insurance is actually to compensate for the loss caused to the customer by the work of a company or any product. In such a situation, the entire cost of the penalty and legal proceedings on the company has to be borne by the insurance company doing the Liability Insurance.