What is Insurance and How it work: complete Guide

Welcome to Jeevan Bima Bazaar! If you're like most people, the mention of the word "insurance" sounds boring and confusing. So don't worry, because you are not alone. Because many people like you feel the same way about this topic.

Insurance can be a complicated subject and it is not always easy to understand. What is insurance and how does it work and why is it important to you? It is being told in this article.

In fact insurance is a way of protecting oneself from financial loss. When you buy insurance, you are paying a premium to the insurance company to compensate you for the financial loss caused by something bad happening to you. In exchange for your premium, the insurance company agrees to compensate you for the financial loss you may have suffered due to something bad happening to you.

When it comes to financial loss, you can understand yourself that there can be many reasons for financial loss. So there are different types of insurance for different reasons. It has different rules for each type of insurance, which fulfills the need of economic loss caused to the person. But don't worry, we'll get into this topic in more detail as we go along.

In this article, we will try to understand this topic in depth. We will explore what insurance is, how it works and why it is so important. We will know the different types of insurance and also try to understand how different types of insurance work and what are their benefits.

Whether you are an insurance veteran or a complete novice to the subject, this article will help you understand the nuances of this important and often misunderstood insurance industry. So, relax and read this article carefully and get ready to become an insurance expert.

Insurance is actually a kind of safety net that protects you from financial losses. To get this type of protection, you have to pay a premium to your insurance company. In return, the insurance company compensates you for the financial loss if something bad happens to you.

For example- You have got your car insured for ₹ 5 lakh. For this insurance, you have paid one year's premium to your insurance company. Now from the date of issue of insurance and within one year if your vehicle meets with an accident, the insurance company will pay you a maximum of ₹ 5 lakh.

Why Insurance is Necessary- Simply put, insurance protects you from financial ruin in the event of an unexpected loss.

Suppose a person meets with an accident and dies. If this person will be the earning person for his family, then the earning of that family will stop and there will be a crisis in front of that family to meet the basic needs like food, clothes and house.

If the person does not die, but is admitted to the hospital. So he has to bear the medical expenses and his earning stops during the treatment. In many cases, the cost of treatment becomes so high that the family has to sell even their property. Many such cases have also been seen that the person trapped in these circumstances becomes bankrupt.

You can avoid such financial calamities by getting insurance. After buying insurance, you are also mentally strong. Because you know that even if you have to face any bad situation, you will get compensation for your loss due to insurance.

Of course, insurance is not free – you have to pay a premium to get the benefits of insurance. But the cost in the form of premium is usually much less than the cost of dealing with an unexpected loss.

For example, you can understand it in such a way that by depositing a small premium, you buy a big insurance for your home, car, your medical or your life. Now if due to some unforeseen reason your house gets burnt or your vehicle gets damaged, the insurance company compensates you for your loss. Similarly, if you need treatment unexpectedly, the insurance company reimburses the expenses incurred for your treatment.

If you die, the insurance company returns the sum assured on your life to your nominee. The amount through which your family can fulfill their needs or can create a source of income for themselves.

When you buy insurance, you must remember that insurance is not a luxury item for you, rather it is an essential necessity for you. By purchasing insurance, you protect yourself and your family from financial disaster and enjoy peace of mind. You feel peace of mind when you know that you and your family are financially secure.

There are many different types of insurance available in India, each offering the benefit of compensating for economic loss caused by a specific risk. Here we are providing you information about some common and popular types of insurance.

Auto Insurance: This type of insurance provides financial protection to different types of vehicles. If there is an accident with your vehicle or your vehicle becomes a victim of an accident, then the financial loss caused to another person due to your vehicle or the damage caused to your vehicle itself is covered in this type of insurance.

Health Insurance: Health insurance is becoming very popular in the present era. This type of insurance covers financial loss due to various types of health expenses. Health insurance has provisions to cover doctor's fees, hospital admission charges, medical expenses and other health related expenses.

Home and Shop Insurance: This type of insurance provides financial protection to your home and shop. If your home or shop is damaged due to fire, storm or any other reason, this insurance helps to cover the cost of repairing or rebuilding your home or shop.

Life Insurance: Life insurance is most popular in India. In this type of insurance, financial security is provided to the life of the people. If a member of the family is an earning member and dies, it becomes difficult for the family to meet its basic needs like food, clothing, housing and education. Now if that member of the family buys his life insurance, then in the event of his death, the family gets the amount of the insurance. The family can generate a means of employment for itself with this amount.

Disability Insurance: A healthy person can take care of all the needs of himself and his family. But if the same person becomes disabled due to some unforeseen reasons, he is neither able to meet his own needs nor that of his family. Disability insurance proves to be beneficial to avoid financial loss due to disability.

Business Insurance: If you own a business, you need to be protected against various types of financial losses. For example, insurance is needed for the loss of your business property, for the loss due to accidents at the business site, for various types of liability, for workers' compensation and to avoid many other types of losses. Is. Business insurance proves beneficial for providing financial protection to such mixed needs.

There are many different types of similar insurance options available in India today. To buy insurance you need to understand your primary needs. So that you can buy the best insurance for yourself and enjoy peace of mind.

Now that we have learned about the different types of insurance, we should also know how exactly does insurance work?

As we have mentioned earlier, insurance is done to avoid the economic loss caused due to any risk. For this you pay a small premium to your insurance company. In return, your insurance company provides you insurance cover as per your insurance.

Let us understand our point with an example- Suppose you have bought a new car, which costs around ₹ 10 lakhs. You contact the insurance company to insure your vehicle. The insurance company tells you that we will insure your car, but for this you will have to deposit ₹ 17 thousand for one year. The insurance company also tells you that in this premium, a cover of ₹ 9.5 lakh will be given for your vehicle.

Now if you buy this insurance policy of the company, assuming this condition of the insurance company, it means that even if your car is completely damaged, you will get a maximum of ₹ 9.5 lakh from the insurance company.

It is also important to understand the second reason, suppose your vehicle meets with an accident. Due to this accident, there is a loss of ₹ 3 lakh in your vehicle. So you will get a maximum payment of ₹ 3 lakh from the insurance company.

But here you have to understand that it is not necessary that all types of insurance policies cover in the same way. Before buying insurance, you have to get detailed information about it.

By understanding how insurance works and choosing the right type of coverage for your needs, you can protect yourself and your property from financial loss caused by life's unforeseen risks.

Insurance in many forms provides many benefits to the individual, society and various types of businesses. We will get information about some of the major benefits of getting insurance here-

Financial Security: You are suddenly left with an additional burden in case of an unexpected loss to your home. You may have to repair or reconstruct your house. This loss can make you financially weak. If you insure your home, then you get compensation for this loss from the insurance company.

Just like health insurance helps to cover medical expenses, life insurance helps to solve the problem of family income. So we can say that insurance provides you financial security.

Peace of Mind: Suppose you buy a health insurance policy for yourself and your family. With the issuance of the insurance policy, you realize that now if the health of any member in the family deteriorates. So the insurance company will compensate for the medical expenses.

Such a thought alone gives peace of mind to you and your family. This is also a reason due to which you along with your family are stress free. On the other hand there is a person who has not made any provision for his health expenses, such a person starts feeling more stressed whenever the thought of illness comes in his mind.

Each type of insurance gives you such a unique experience of happiness. According to psychology, the person who is stress-free, his life is happier and longer than other people.

Legal Protection: Suppose your vehicle causes damage to the life or property of a person and you are sued by the person who has suffered the damage. Now if you have insured your vehicle which has provision for third party cover, then your policy helps in covering any damages awarded against you. Due to which you are saved from the financial loss due to legal action.

Risk Management: Suppose you are a big businessman and you have appointed an important person to look after your work. This is the person because of whom all the important decisions of your company are made. Now if such a person refuses to work with you for any reason whatsoever. So it is possible that your company may suffer intolerable loss. Insurance gives you the power to avoid any such risk.

Similarly, suppose the workers of your company suddenly go on strike. Even if this happens, you can suffer a big loss. This types of sudden economic risk can be managed with the help of insurance.

Social Benefit: Suppose the earning member of a family dies. After the death of such a person, that family has to face many problems. The family may have to compromise for children's education, living and dressing, food and travel etc.

When this happens, the family gradually starts feeling different from the society. But if that family gets the benefit of insurance, then it makes a means of earning to establish itself as before. Because of which such a family feels itself compatible with the society.

Overall, the benefits of insurance are numerous and far-reaching. Whether you are looking to take advantage of insurance to protect your personal assets or secure the future of your business. Insurance continues to work to establish stability in every area of your life and in every situation.

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Keeping all the above in mind, we can say that insurance is an essential part of modern life. It provides financial security, legal aid, risk management and peace of mind to individuals. In the absence of insurance, we would be forced to bear great hardships in case of unforeseen events like accidents, diseases, natural calamities and legal disputes.

After reading this article you must have come to know that there are many different types of insurance available today. The benefits of each insurance are different from each other. When it comes to insurance, it becomes of paramount importance for you to do your research to get the right insurance for yourself so that you get the right coverage that suits your needs.

While shopping for an insurance policy, you must carefully consider the factors like premium, coverage limit, terms and conditions etc. of the insurance policy. You should choose an insurance policy that offers the right balance of insurance cover and premium.

Lastly, the most important thing you should be sure about is what is important in your life, the risk of which could result in a huge financial loss to you. A systematic list should be made and after this list is made, a decision should be taken to buy an insurance policy on the basis of priority. This list of yours will prove to be helpful in making such decisions in the future as well.