An insurance policy/plan is an contact between an individual (Policyholder) and an insurance company (Provider). Under the contract, you pay regular amounts of money (as premiums) to the insurer, and they pay you if the sum assured on unfortunate event arises, for example, untimely demise of the life insured, an accident, or damage to a house. Let’s know more about what is insurance and what are the various benefits, features & types of insurance available in India.
Based on the insurance terms, the insurer provides a lump sum amount to the policyholder/nominee in case of an eventuality.
The choice of a specific type of insurance policy is made based on individual needs and life goals.
There are various components of an insurance policy, a firm understanding of which helps a lot in choosing the plan that is most suitable for your needs.
How Does Insurance Work?
As defined above, an insurance policy is a legal contract that binds both policyholder and the insurance company towards each other. It has all the details of the conditions or circumstances under which either the insured individual or policy nominee receives insurance benefits from the insurer.
Insurance is a method by which you can protect yourself and your loved ones from facing a financial crisis. You buy an insurance policy for the same, while the insurance company takes the risk involved and offer insurance cover at a specific premium.
In case of any eventuality, the insured or nominee can file a claim with the insurer. Based on the evaluation criteria for claims, the insurer reviews the claim application and settles the claim.
Benefits of Insurance
1.Cover against Uncertainties
It is one of the most prominent and crucial benefits of insurance. The insured individual or organizations are indemnified under the insurance policies against losses. Buying the right type of insurance policy is indeed, a way to get protection against losses arising from different uncertainties in life.
2. Cash Flow Management
The uncertainty of paying for the losses incurred out of pocket has a significant impact on cash flow management. However, with an insurance policy by your side, you can tackle this uncertainty with ease. The chosen insurance provider pays in the event of happening of an insured event whenever they occur.
3. Investment Opportunities
Unit linked insurance plan, , invest a part of the premium into several market linked funds. This way, they enables you to invest money regularly to benft of market linked returns and fulfil your life goals.
