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| What are the types of insurance? |
What is insurance or insurance?
Insurance is one of the most effective risk management tools.
Any person or business can be protected from various financial losses or risks if the management is adopted.
Although mental and psychological damage is never compensable, at least financial loss can be covered by this insurance.
Life is definitely uncertain, which you cannot change in any way, but insurance definitely helps you reduce your life-related financial losses to a great extent.
What are the types of insurance?
Basically, there are 8 types of insurance.
1. Life Insurance:
The essence of this type of insurance is to secure a person's life in return for money.
Here a fixed sum assured is paid to the policyholder's nominee on the death of the policyholder or on the expiry of a specified term.
Nowadays life insurance is most popular because life is the most important asset for any human being.
This type of insurance provides protection to the policyholder's family in case of premature death.
Or, it also provides an adequate amount of money in old age when earning power declines.
Under personal insurance a limited amount is paid in case of any kind of accident.
Insurance not only provides protection but also pays back the sum assured on the death or expiry of the term.
2. General Insurance or General Insurance:
Property insurance, liability insurance, and other types of insurance are examples of general insurance.
Even, fire and marine insurance are considered under property insurance.
The most difficult form of liability insurance is fidelity insurance.
In this type of insurance, the insurance company has to repay the amount owed by the insured to a third party.
3. Property Insurance:
Under property insurance, one's property is protected against a specific risk.
In case of property damage due to various calamities ranging from fire, property theft or accidents, the compensation is provided in this type of insurance.
4. Marine Insurance:
This insurance is effective in cases ranging from collision with rocks at sea, attack by enemy and more.
It is of two types – Inland and Ocean Marine Insurance.
Here insurance can be taken on the ship, cargo and cargo.
5. Fire Insurance:
This type of insurance covers any loss from personal to society.
Damage to personal property, or loss due to fire due to riots and accidents is also covered under this insurance.
6. Liability Insurance:
In this insurance the insured is liable to pay for the loss of property or compensation for the loss of any person.
7. Social Insurance:
This insurance provides protection to the weaker sections of the society, those who are unable to pay the premium for adequate insurance. Different types of social insurance include pension plan, disability benefit, industrial insurance, unemployment benefit, sickness insurance etc.
8. Health Insurance:
This type of insurance is a special type of insurance that covers a person's medical expenses.
Of course, the insurance company will cover your medical expenses depending on how much premium you pay and your policy limit.
What are the benefits of insurance?
An insurance policy performs several functions and provides multiple benefits.
Some of the general benefits of this insurance are discussed below –
1. Provides protection to:
Insurance helps a person recover from dangerous situations by mitigating the impact of financial loss.
It protects the aggrieved by providing financial compensation during financial crisis.
These insurances not only free people from financial problems, but also free them from the mental stress created by such situations.
2. Guarantees:
Insurance gives a sense of assurance to any policy holder.
Any individual spends a small portion of their income on regular insurance to secure their future just to get this assurance.
Hence, insurance is guaranteed to provide reliable financial support in return for a small premium.
It promises to protect the policy holders financially in case of an accident, or any peril.
3. Risk Sharing:
The manner in which the insurance policy works has transformed it into a cooperative scheme.
An insurer or insurance company is often unable to pay out of its own capital.
Any insurance company handles risk collectively By accepting many premiums at once.
Hence, these insurance companies provide coverage to a large number of vulnerable people.
And, when the insured person claims the insurance coverage, the insurance company pays the coverage amount to that particular person from the remaining insured funds.
Thus, all policyholders share the risk of the individual falling into that particular peril.
4. risk value
Insurance policies assess the levels of risk and predict various reasons for the occurrence of these risks.
Insurance determines the amount of coverage and the amount of premium paid based on the degree of risk.
It provides protection against unforeseen events and consequent losses.
5. Production of Capital:
Funding of insurance companies is made up of money received from various premiums.
Insurers invest this wholesale money in various segments of the market.
For example, insurance companies invest in stocks, mutual funds and other productive channels.
Hence, these insurances help in increasing revenue and profit for the business.
which protects the company against loss of capital.
6. Helps in economic growth:
Insurance policies pool domestic expenses to provide financial stability.
These policies seek to mitigate losses caused by loss or destruction to the insured community.
It not only shares the risk equally, but also helps to grow the business using funds.
7. Helps to create conservation habits:
Insurance policies help inculcate saving habits in people.
They reserve a portion of the income to pay the premium, which protects them from unknown future hazards.
There are many insurance plans, including insurance-and-savings or insurance-and-investment schemes.
Hence, insurance encourages individuals to save and invest.
Today our article on insurance is over.
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our last words,
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