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Insurance – Understand math’s before buying Insurance Policy

Insurance – Understand math’s before buying Insurance Policy

What Is Insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

People or corporations buy Insurance policies to hedge against the risk of financial losses, whether is small or large scale, which can result from damage to the insured property, or from the liability for damage caused or injury caused to a third party.

How Insurance Works

 

There are various types of insurance policies that are available in the market, and infact any individual or business can find an insurance company which will be willing to insure them at a price. The most common types of personal insurance policies found in the market  are life insurance, health insurance, home owners insurance and  auto Insurance  Most individuals in globally have at least one of these types of insurance. The car insurance is required by law at all times.

IMPORTANT POINTS TO NOTE

  • Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies and/or perils. 
  • There many types of insurance policies. Life, health, homeowners, and auto are the most common forms of insurance.
  • The core components that make up most insurance policies are the deductible, policy limit, and premium.

As mentioned earlier – Businesses require specific types of insurance policies that insure against specific types of risks faced by a particular business. For example, a restaurant needs a policy that covers damage that occurs as a result of cooking while an auto dealer may not be subject to this type of risk but most certainly  require an insurance  coverage for damage or injury that could occur during driving his vehicle.

There are also insurance policies which are meant for  very specific needs, such as kidnap and ransom (K&R), medical malpractice, and professional liability insurance, also known as errors and omissions insurance.

Components of Insurance Policy

Before  choosing an insurance policy, it is very important to understand how the total insurance system works.

A thorough  understanding of the following concepts will help you in choosing  the right  policy that perfectly suits your needs. Primarily there are 3 important components in any insurance policy 1. Premium 2.Policy limit 3. Deductible

Premium

A policy’s premium is the cost of Policy or in other words the price of the specific insurance cover,  normally they are expressed as quarterly or  monthly cost. Insurance premium is calculated on the basis of  insuring persons business’s risk profile including  creditworthiness in the market.

For example, if you own several expensive vehicles and the person has the  history of driving reckless, he may have to  pay more for an auto policy than someone with a mid-range car and a good  driving history. However, different insurance companies  may charge different premiums for similar policies. So you need to do a lot of legwork which includes comparing similar policies offered by different companies and their monthly or quarterly price and that which perfectly suits your requirement. There are many online comparison tools available in india including Policy Bachat and Policy Bazar  

Policy Limit

The policy limit is basically  the maximum total amount the  insurer will pay under a specific policy to  cover the loss. Maximums(the upper limit) can be set as per time period ( for example  annual or policy term), per loss or injury, or over the life term of the policy, which is also known as the lifetime maximum. 

Generally, higher limits comes with  higher premiums. For example in a general life insurance policy, the maximum amount the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured.

Types of Insurance

  • Life Insurance
  • Property Insurance.
  • Marine Insurance.
  • Fire Insurance.
  • Liability Insurance.
  • Guarantee Insurance.
  • Social Insurance.

Brief explanation below

Life Insurance

Insurance life – The Life Insurance Policy  is different from other insurance policies as here, the subject matter of insurance is the life of the  human being.

The insurer company will pay the fixed amount of insurance at the time of death or at the time of expiry of the said Policy.

With Covid-19 Noval corona virus  at present the life insurance enjoys the maximum scope because life is the most important property of an individual and people are concerned about their family members (the economic situation which their family members may face after the death of the key earning member of the family). Today every individual requires a life  insurance policy as the insurance cover not just  provides protection to the family at the premature death  but also provides sufficient  amount at the old age when earning capacities are reduced. Under personal insurance, the payment is made at the accident. Hence the personal insurance is not only an economic shield for the deceased family members but it is also a kind of investment as a certain amount is refunded to the insured family members at the death of the insured person or the expiry of a period of the insurance.

General Insurance

General insurance includes Liability Insurance, Property Insurance  and Other types of Insurance. In the property insurance, the property of person are insured against a certain specified risk. ( Business Health Insurance )

Marine Insurances  & Fire are a part of  Property Insurance. Theft, Fidelity, Motor insurance and Machine Insurances include the term of liability insurance to a certain extent.

Under  liability insurance the insurer compensates the loss to the insured person when he is under the liability of payment to the third party.

Under Property Insurance the risk may be through outbreak of fire or marine perils, theft of property or goods damage to property by an accident.

Marine Insurance for ship (Hull), cargo and freight

Under Marine insurance cover – the insurance company provides a protection against the losses incurred due to marine perils. Marine perils includes collision of ship with a rock or another  ship, attacks by enemies, fire, or captured by pirates as these perils cause damage, disappearance or destruction of  ship and cargo and or  non payment of freight etc.

In the past  only a few type of  nominal risks were insured but with the change in time and the dynamics of ever growning Marine industry the scope of marine insurance has changed phenomenally . It has now been segregated  into 2 segments 1.Ocean Marine Insurance 2. Inland Marine Insurance.

The Ocean Marine Insurance covers  the marine perils while the inland Marine Insurance  covers inland perils which may arise with the delivery of cargo (goods) from the gowdonsto the insured party and may cover upto the receipt of the cargo by the importer at his facility.

Fire Insurance

In the Fire Insurance the risk covered is to the extent of fire or loss of property due to fire. In the absence of fire insurance, the fire waste will increase the risk not only limited to the individual but to the society (neighbourhood). With fire insurance, the losses arising due to fire are compensated in full or part as the type of insurance may be  and the society will also not lose much in the untoward incidence . The fire insurance not only protect incidental  losses but  provides certain consequential losses such as war risk, turmoil risk, riots risk, etc. which can be insured under this insurance.  (  small business health insurance )

home insurance price quotes

Liability Insurance

The general Insurance also covers the liability insurance under which  the insured is liable to pay the damages caused to the property or to compensate for the loss of persona; injury or death. The said  insurance is like the fidelity insurance, automobile insurance, and machine insurance, etc.

Social Insurance

The social security insurance is  provided as a  protection to the weaker sections of the society who are unable to pay the premium for adequate insurance. disability benefits, Pension plans, sickness insurance, unemployment benefits, and industrial insurance are some of the types of social insurance.

Guarantee Insurance

It’s a kind of insurance to the day to day  Business activities where in this insurance guarantees to covers the loss arising due to disloyalty, dishonesty and  disappearance of the employees or second party. The  failure causes loss to the first party( Business Unit).

For example, in  EXIM Trade  if the Business Unit takes an insurance cover of export insurance, the insurer will compensate the loss at the failure of the importers to pay the amount of debt.

Miscellaneous Insurance

valuable articles, machinery, Goods, property, automobiles , Furniture etc. can be insured against the damage or destruction due to accident or disappearance due to theft.

There are different types  of insurances for each type of the said property wherein not only does the property insurance exists but the liability insurance and personal injuries are also the insurer.

Health Insurance

Health insurance is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses.  health insurance is defined as “coverage that provides for the payments of benefits as a result of sickness or injury. It includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment

Top 5 Health Insurance Plans  –  Insurance health

1.Religare Care Health Insurance Plan
2.Star Family Health Optima Plan
3.Apollo Munich Optima Restore Plan 
4.HDFC Ergo Health Suraksha Gold Plan 
5.Max Bupa Health Companion Individual Plan 

Auto Insurance

View Instant Quotes  

Insurance of car  more popularly known as Car Insurance: It offers coverage for property like theft or damage of your car liability, legal accountability to others for property damage or bodily injury, the expenses for injury treatment etc. As per law, it is mandatory for vehicle owners to buy a car insurance for their vehicles plying on Indian roads. insurance renewal car otherwise known as Insurance renewal for cars and Automobile – is an annual exercise where every vehicle owners go through it to cover the risk associated with the damage of cars and other automobiles.

Types of car insurance

(get auto insurance online by clicking the links below)

Popular car insurance plans

auto insurance quotes online

Two Wheeler

Insurance of bike or Two wheeler insurance refers to an insurance policy, taken to cover against any damages that may occur to you & your motorcycle, bike / two wheeler due to an accident, theft or natural disaster. insurance two wheeler  – 2 wheeler insurance provides protection against third party liabilities arising from injuries to one or more individuals.

Top Insurance for Bike

Bajaj Allianz Two Wheeler Insurance

Bharti AXA Two Wheeler Insurance

Reliance Two Wheeler Insurance

Liberty Two Wheeler Insurance

IFFCO Tokio Two Wheeler Insurance

ICICI LOMBARD Two Wheeler Insurance

Universal Sompo Two Wheeler Insurance

United India Two Wheeler Insurance

Oriental Two Wheeler Insurance

New India Assurance Two Wheeler Insurance

National Insurance Two Wheeler Insurance

Magma HDI Two Wheeler Insurance

Travel Insurance

Travel Insurance also referred to as visitor insurance or overseas medical insurance is a special facility offered by insurance companies in India to cover you against the following unforeseen situation while travelling abroad.

  • Key coverage in Travel Insurance Plan
  • Medical Expenses (Accident or Sickness)
  • Personal Accident Cover
  • Baggage Loss or Delay
  • Trip Delay or Cancellation
  • Passport Loss
  • Emergency Medical Evacuation
  • Missed Connecting Flights
  • Repatriation of Mortal Remains
  • Compassionate Visit

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