What is insurance and what are its types? | Everything you need to know about insurance in 2022

Insurance is an effective tool to deal with the possibility of loss in the future. We do not know what will happen tomorrow, so we try to cover the possible loss in the future through an insurance policy.

Insurance means protection against risk. If an insurance company insures a person, then the insurance company will compensate the financial loss caused to that person.

Insurance

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Similarly. if an insurance company has insured a car, house, or smartphone then in case of a break, loss, or damage of that thing, the insurance company gives compensation to its owner according to the pre-determined condition.

Insurance is a contract between the insurance company and the insured. Under this contract, the insurance company takes a certain sum of money (premium) from the insured person and reimburses the insured person or the company in case of any loss as per the terms of the policy.

How many types of insurance are there?

Generally, there are two types of insurance:

  1. Life Insurance
  2. General Insurance

In life insurance, the life of a person is insured.

Life Insurance: Life insurance means that, on the death of the person who bought the insurance policy, his dependent gets compensation from the insurance company.

If the head of the family dies untimely, it becomes difficult to run the household expenses. It is necessary to take a life insurance policy to protect the wife/children/parents etc., of the head from the financial crisis. In financial planning, first of all, a person is suggested to buy a life insurance policy.

General insurance includes all vehicles, houses, animals, crops, health insurance, etc.

Home Insurance: If you insure your house with a general insurance company, then your home is protected in this. After buying an insurance policy, if there is any kind of damage to your house, then the insurance company gives the reimbursement for that damage.

This Insurance policy covers any damage to your home. Damage caused by natural calamity to the house includes damage due to fire, earthquake, lightning, flood, etc., Artificial disaster includes damage to the house due to theft, fire, fighting-riots, etc.

Motor Insurance: It is very important to ensure any vehicle running on the road according to the law. If you drive your vehicle on the road without insuring it, then you can be fined by the traffic police. According to the motor or vehicle insurance policy, the insurance company gives compensation for any damage caused to the vehicle. If your vehicle is stolen or there has been an accident, then a vehicle insurance policy can help you a lot.

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You get the most benefit from a vehicle insurance policy when your vehicle has caused injury or death to a person. It is covered under Third Party Insurance. If you also have a two-wheeler/three-wheeler or car, then it must be insured.

Health Insurance: Nowadays, the cost of treatment is increasing very fast. On taking health insurance, the insurance company covers the cost of treatment in case of illness. Under the health insurance policy, the insurance company pays the amount spent on the treatment of any kind of disease. The limit of expenditure on any illness depends on your health insurance policy.

Travel Insurance: Travel insurance protects against loss during a trip. If a person goes abroad for some work or to travel, and he gets hurt or the goods are lost, then the insurance company gives him compensation. A travel insurance policy is valid from the beginning of your journey till the end of the journey. Different insurance companies may have different conditions for travel insurance policies.

FAQs

What is an Insurance policy?

Insurance is a contract between the insurance company and the insured. Under this contract, the insurance company takes a certain sum of money (premium) from the insured person and reimburses the insured person or the company in case of any loss as per the terms of the policy.

How many types of insurance are there?

Generally, there are two types of insurance:
1. Life Insurance
2. General Insurance

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