Many of us think that taking insurance is a cost and utter waste. But, remember, this cost is very least when you compare the benefits that accrue to you in the event of an unfortunate event.
Moreover, the money spent in insurance contracts can be a good savings -cum- investment for your life and the family.This arrangement takes care of the welfare of your family. You can make a choice of good plans to cover the basic risks of your living like Life, Health, Home, Vehicles, etc.
For your business or profession, go for the policies that will insure the risks associated with your products, fixtures and fittings like plant and machinery,etc..
What is Insurance?
Risks involved in our life are many. Death is the unbearable and irreparable of all risk.That too untimely death leaves shock and vacuum in a family. To take care of such unfortunate death or any sort of risk , a mechanism is in place to transfer the risk from one place or person to another.
When risks are managed by self without transfer to another, they are ” Retained Risks” and they are called as ” Transferred Risks ” when passed on to another for a consideration or price which is popularly known as “Premium”.
As the cost is heavy, an individual cannot bear the risk of others. However, an institution like Cooperative or Firm or Corporate concern can manage them . Cooperative Society for Death relief is an example for managing the expenses arising from death of a member. This is very popular among fishermen folks whose life is at risk when venturing out into the sea.
Types of Insurance
There are basically two types of insurance: life and non-life insurance.
Life type is for compensating the dependants in the event of death of the policy holder. This has two sub categories as 1) pure insurance or term insurance where premium rate will be lower but no returns or refunds made if the person survives after the policy period 2) endowment type ,where death and maturity benefits are combined ,which naturally comes at a higher premium.
Non life products cover the risks like Accident, Marine, Health, Goods, Agricultural crops,Cash-in-transit, etc. The popular Mediclaim policy belongs to Health insurance category.
Apart from these, third type exists as Reinsurance which insures risks like Satellite, Spacecraft, etc…involving huge amounts and also when the sum insured exceeds ₹100 crores for each case.
The benefits of insurance will be made fully under all policies for Life insurance whereas only one insurance amount will be settled in the case of Non-life insurance type. Another difference is the period of cover : one year for non-life policy renewable every year and longer period for life insurance.
Do’s & Don’t s for Insurance
1) Always read the contract notes when received after committing to an insurance cover.Possibilities are there, that even after taking all precautions prior to buying the insurance product, some exclusions to the risks coverage .
2) Always keep the policy in force by paying the premium regularly.Your claim will be rejected if you have not paid the premium.
3) Always Keep the insurance company informed if you make any changes in the Address, change in the nature and composition of assets covered,etc..This issue crops up in the case of business assets and movable assets like vehicles . When you buy a second hand asset, the risk is more: you have to ensure the title is transferred in your name before taking the insurance.
4) Always buy Life insurance covers from the reputed companies which have a good name in the market .New insurers tend to be inclined towards more business and profit , rather than the payment of the claims under their policies.
So, Insurance cost is a Not a Liability but an Investment for Future asset .
BE INSURED FOR HAPPY LIFE.
(Author is a Ex-Banker and can be contacted on firstname.lastname@example.org)