Insurance in its basic form is defined as “ A contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event."
In simple terms it is a contract between the person who buys Insurance and an Insurance company who sold the Policy. By entering into contract the Insurance company agrees to pay the Policy holder or his family members a predetermined sum of money in case of any unfortunate event for a predetermined fixed sum payable which is in normal term called Insurance Premiums.
Insurance is basically a protection against a financial loss which can arise on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. By paying a very small sum of money a person can safeguard himself and his family financially from an unfortunate event.
For Example if a person buys a Life Insurance Policy by paying a premium to the Insurance company , the family members of insured person receive a fixed compensation in case of any unfortunate event like death.
There are different kinds of Insurance Products available such as Life Insurance , Vehicle Insurance, Home Insurance, Travel Insurance, Health or Mediclaim Insurance etc.
To know more about different type of Insurance Products please visit our page Learn Insurance .
Why do I need Insurance ?
What will happen to my family if god forbidden something happens to me ?
If this question bothers you, then Life Insurance is the answer. An Insurance company collects a small percentage from you and in return promises to pay your family a predetermined sum in case of an unfortunate event.
The Basic Logic of Insurance is to :
Provide Financial Security to your family.
Protect your Assets such as Car, Equipments, House etc from Accidents or natural disasters.
As a means of Investments and Savings
What are the benefits of taking Insurance ?
There can several benefits for taking Insurance, some of them are listed below.
Financial Security of Life and Assets in case of an unfortunate event.
Tax Relief by way of deductions from Income, which lowers tax burden.
Encourages saving and helps in Financial Planning for the Future.
Life Insurance Policies can be used as security to obtain a Loan.
