Insurance may be a legal agreement between two parties i.e. the insurance firm (insurer) and therefore the individual (insured). In this, the insurance firm promises to form good the losses of the insured on happening of the insured contingency.

The contingency is that the event which causes a loss. It are often the death of the policyholder or damage/destruction of the property. It’s called a contingency because there’s an uncertainty regarding happening of the event. The insured pays a premium reciprocally for the promise made by the insurer.

How does insurance work?

The insurer and therefore the insured get a legal contract for the insurance, which is named the policy . The policy has details about the conditions and circumstances under which the insurance firm can pay out the insurance amount to either the insured or the nominees.

Insurance may be a way of protecting yourself and your family from a loss . Generally, the premium for an enormous insurance cover is far lesser in terms of cash paid. The insurance firm takes this risk of providing a high protect alittle premium because only a few insured people actually find yourself claiming the insurance. this is often why you get insurance for an enormous amount at a coffee price.

Any individual or company can seek insurance from an insurance firm , but the choice to supply insurance is at the discretion of the insurance firm . The insurance firm will evaluate the claim application to form a choice . Generally, insurance companies refuse to supply insurance to high-risk applicants.

What are the kinds of insurance available in India?

Insurance in India are often broadly divided into three categories:

Life insurance

As the name suggests, life assurance is insurance on your life. you purchase life assurance to form sure your dependents are financially secured within the event of your untimely demise. life assurance is especially important if you’re the only breadwinner for your family or if your family is heavily reliant on your income. Under life assurance , the policyholder’s family is financially compensated just in case the policyholder expires during the term of the policy.

Health insurance

Health insurance is bought to hide medical costs for expensive treatments. differing types of insurance policies cover an array of diseases and ailments. you’ll buy a generic insurance policy also as policies for specific diseases. The premium paid towards a insurance policy usually covers treatment, hospitalization and drugs costs.

Car insurance

In today’s world, a automobile insurance is a crucial policy for each car owner. This insurance protects you against any untoward incident like accidents. Some policies also catch up on damages to your car during natural calamities like floods or earthquakes. It also covers third-party liability where you’ve got to pay damages to other vehicle owners.

Education Insurance

The child education insurance is like a life assurance policy which has been specially designed as a saving tool. An education insurance are often an excellent thanks to provide a payment amount of cash when your child reaches the age for education and gains entry into college (18 years and above). This fund can then be wont to buy your child’s education expenses. Under this insurance, the kid is that the life assured or the recipient of the funds, while the parent/legal guardian is that the owner of the policy.

You can estimate the quantity of cash which will enter funding your children’s education using Education Planning Calculator.

Home insurance

We all dreaming of owning our own homes. Home insurance can help with covering loss or damage caused to your home thanks to accidents like fire and other natural calamities or perils. Home insurance covers other instances like lightning, earthquakes etc.

What are the tax benefits on insurance?

Apart from the security and security benefits of shopping for insurance, there also are the tax benefits that you simply can avail.

Life insurance premium of up to ₹1.5 lakh are often claimed as a tax-saving deduction under Section 80C Medical premium of up to ₹25,000 for yourself and your family and ₹25,000 for your parents are often claimed as a tax-saving deduction under Section 80D. These claims need to be made at the time of e-filing tax returns.