what is insurance?
Insurance is a formal agreement between two parties namely the insurance company (insurance) and the individual (guaranteed).
In this case, the insurance company promises to make up for the loss of insurance in the event of a confirmed incident.
Critical situation is an event that causes loss. It could be the death of the policyholder or the damage / damage to property.
It is called an event because there is uncertainty about the occurrence of the event. Insurance pays a premium for a promise made by the insurer.
How does insurance work?
The insurer and the insured receive a formal insurance contract, called an insurance policy. The insurance policy contains details of the circumstances in which an insurance company will pay the amount of insurance to the insured or the nominees.
Insurance is a way to protect yourself and your family from losing money. In general, the premium for large insurance is much smaller than the amount paid.
The insurance company takes this risk of providing a low premium cover because very few insured people end up looking for insurance.
That’s why you get big money insurance at a lower price. Any person or company can claim insurance from an insurance company, but the decision to offer insurance is at the discretion of the insurance company.
The insurance company will evaluate the application for a decision. Generally, insurance companies refuse to offer insurance to high-risk applicants.
What types of insurance are available in India?
- Insurance in India can be broadly divided into three categories:
- Life insurance
- As the name suggests, life insurance is insurance in your life. You buy life insurance to make sure your dependents are financially secure in the event of your sudden death. Life insurance is very important if you are the sole breadwinner for your family or if your family is heavily dependent on your income. Under life insurance, the policyholder’s family is financially compensated in the event of the policyholder’s termination of employment.
- Health insurance
- Health insurance is purchased to cover medical expenses for expensive treatment. Different types of health insurance cover many diseases and ailments. You can purchase general health insurance policy and certain disease policies. The premium paid for health insurance policy usually covers the cost of treatment, hospitalization and medication.
- Car insurance
- In today’s world, car insurance is an important policy for every car owner. This insurance protects you from any unforeseen event such as accidents. Some policies reimburse your car for compensation for natural disasters such as floods or earthquakes. It also covers third-party debt where you have to pay damages to other car owners.
- Educational Insurance
- Children’s education insurance is like a life insurance policy specifically designed as a savings tool. Educational insurance can be a great way to offer a lump sum when your child reaches higher school years and enters college (18 years and older). This fund can then be used to pay for your child’s higher education. Under this insurance, the child is a life guarantee or a financial recipient, while the parent / legal guardian is the policy owner. You can estimate the amount of money that will go into supporting your children’s higher education using the Education Planning Calculator.
- Home insurance
- We all dream of having our own homes. Home insurance can help cover the loss or damage caused by your home as a result of accidents such as fires and other natural disasters or accidents. Home insurance covers other conditions such as lightning, earthquakes etc.
What are the benefits of tax insurance?
In addition to the safety and security benefits of buying insurance, there are also tax benefits that you can get.
A life insurance premium of ₹ 1.5 lakh may be claimed as a tax deduction under Section 80C.
A medical insurance premium of up to 25,000 for you and your family and ₹ 25,000 for your parents may be claimed as a tax deduction under Section 80D
These claims must be made at the time of submission of income tax returns.