Insurance is a contract between an insurer and an insured, whereby the insurer agrees to pay a certain amount of money in case of loss. Insurance covers different kinds of risks, including property, health, life, and other kinds of risks. The insurance company pays a premium to the insurer for covering the risk, which the insurer then passes on to the insured as a part of the payment for the policy. The insured is required to pay only the difference between the amount paid by the insurer and the sum assured under the policy.
Insurance is one of the most important financial instruments available today. Insurance can be categorized into two broad categories:
* Life Insurance
* Non-Life Insurance
Life insurance protects against the risk of premature death, while non-life insurance covers other risks like property damage, disability, and other similar risks.
The life insurance market is currently experiencing a huge boom, with the number of new policies being issued increasing by more than 50% from 2007 to 2008. This increase in the number of policies being issued is attributed to the growing awareness among people about the importance of insurance, coupled with the increasing number of insurance companies offering attractive products.
Non-life insurance is the largest segment of the insurance market. It includes home, auto, travel, and health insurance.
There are three major types of non-life insurance:
* Home Insurance
* Auto Insurance
* Travel Insurance
Home Insurance
A home is considered to be one of the most valuable assets that any individual has. However, it is also one of the most expensive assets that any individual can have. This is because the value of a home increases with time. In addition, a house cannot be rebuilt once it has been damaged or destroyed. Therefore, a home insurance policy is very important for those who own a home.
An insurance policy for a home protects the owner from the risk of damage or destruction of his/her home. Such a policy will cover the cost of repairing or rebuilding the home if it is damaged or destroyed due to an accident, fire, or other natural calamities.
Auto Insurance
Auto insurance is one of the most common forms of insurance. A car is considered to be one of man’s most expensive investments. However, it is also a very expensive asset to repair or replace. If your car is damaged or destroyed due to any reason, you will need to bear the cost of repairing or replacing it. This is where an auto insurance policy comes into play.
An auto insurance policy covers the cost of repairing or replacing your car in case it is damaged or destroyed due an accident, fire, or some other natural calamity.
Travel Insurance
Travel insurance is another form of insurance that is popular with travelers. If you are traveling abroad, it is very important that you take out a travel insurance policy. A travel insurance policy will help you to recover the cost of medical expenses, lost baggage, and other such expenses that you may incur due to an accident, illness, or other mishap.
It is advisable that you purchase a travel insurance policy before you leave for your destination.
