Insurance is financial protection against loss or harm. The function of insurance is to safeguard against financial loss by having the loss of the few paid by contributions of the many that are exposed to the same risk.
Characteristics of Insurance
- Pooling of losses
- Payment of fortuitous losses
- Risk transfer
Benefits of Insurance to Society
- Indemnification for loss
- Less worry and fear
- Source of investment funds
- Loss prevention
- Enhancement of credit
Types of Insurance
1. Life Insurance
It is a protection from financial loss suffered from individual insured death. It provides financial security to your family resulting from unforeseen events.
2. Health Insurance
It provides coverage against an individual’s medical expenses. It can either be on a cashless basis or reimbursement basis. The person can take health insurance on an individual basis or floater basis (family plan).
3. Motor Insurance
It is a mandatory policy issued to all vehicles which cover losses arises to the owner’s as well as to the third party. As per the Indian Motor Vehicles Act’1988, third party insurance is a must for every vehicle, without which you can’t drive your vehicles on the roads.
4. Home Insurance
These type of policies covers your home and/or contents from risk of losses/damages against any unforeseen events like fire,theft etc. The landlord can buy the policies against their physical assets and at the same time, the tenant can also buy the policy to cover the household contents. This way you can enjoy your vacations stress free since the assets and the contents are already covered against any unforeseen events.
You will get rebate if your house is covered through 24 hour security guards and are having well equipped fire extinguishers, water sprinklers etc.
You have to keep it in mind that these type of policies covers the constructions cost only. The insurance companies have generally fixed rate of constructions for different localities. Therefore, it is always advisable to take the sum assured based on the cost of construction only.
5. Professional Indemnity Insurance
It is also known as error and omission policy. These type of policies protect individuals and businesses who provides consultation services by charging fees from the clients.
The coverage provided by the insurance company focuses on the alleged failure of the service delivery which has led to financial loss due to errors and omissions in the services or consultations.
It covers all legal liabilities arising out of negligence, omissions or errors of professional while rendering services that causes damages to third party property or third party itself.