Insurance is one way of managing the risk. When you’re going to buy an insurance policy that means you are buying protection for unexpected financial damages. If any unfortunate incident happens to you, the insurance company will compensate you or someone you have already nominated. Insurance is a financial safety net that helps you and your loved ones recover after something bad happens like an accident, fire, theft, and lawsuit. People with no insurance may have to bear all related expenses in the event of an untoward incident like a car accident.
An insurance plan can help pay for medical emergencies, hospitalizations, diseases and treatments, and future medical needs. Insurance can cover the financial loss of a family due to the unfortunate death of the sole breadwinner. When you purchase insurance that means you will receive an insurance policy. This is a legal contract between you and your insurance service provider company.
How can insurance help you?
General insurance involving property and casualty insurance protects you and your assets against financial risks if something goes wrong. Insurance can’t prevent something from happening, but it means you won’t have to pay the full amount of the damage if the unexpected happens that you are covered by insurance.
What are the reasons of buying insurance?
- High value – To protect something that has been purchased at a high value such as a house, car, jewellery, costly painting, etc, or a loan has been taken on them.
- Liability – To give financial protection if sued, for example, someone sues you for negligence after injuring him on your property.
- Catastrophe – To protect property and possessions from fire, floods, cyclones, or any other disasters.
- A specific event – To protect you when you do things that are not covered by normal insurance policies, such as International travel
What are the main insurance policies to be purchased?
- Life Insurance – Life insurance protects those who are financially dependent on you such as your parent, spouse, children, or any other blood relative who are expected to face financial crunch in the event of your untimely and unfortunate death. Think how much you earn in a year and purchase an insurance policy that replaces that income.
- Health Insurance – Rising medical costs are reason enough to need health insurance. Basic health checkups, treatment for serious injuries requiring hospitalization, treatment for illnesses requiring emergency surgery, etc. are covered by insurance.
- Disability Insurance – The possibility of long-term disability (LTD) is so scary that some people tend to ignore it. Long Term Disability Insurance provides a cash benefit equal to a portion (50% or 60%) of the insured’s salary for the insured’s disability. Long-term failure usually begins when the short-term failure ends.
- Liability Insurance – Personal injury includes injuries to third parties, such as customers and clients that occur in your business. General liability insurance can help you in covering his medical costs.
What are key Components of an insurance policy?
Every insurance policy has following parts –
- Declarations
- Insuring agreements
- Definitions
- Exclusions
- Conditions
Some insurance policies have another part called Endorsements. People who want to avail any insurance policy can review in terms of above 5-6 principles.
How to buy an Insurance Policy?
Step 1: Identify your need of buying insurance
Step 2: Analyze the amount to be covered for your need
Step 3: Filter your search as per your requirement
Step 4: Compare the shortlisted plans
Step 5: Choose a plan and read the bylaws
Step 6: Complete your documentation in consultation with your insurance advisor
Step 7: Make Payment
Step 8: Wait for Insurer’s Decision