Buying Guide 2019 About You should know

What is insurance, types of insurance | Principal of Insurance

What is Insurance main What is insurance, types of insurance | Principal of Insurance

Do you know what is insurance or insurance? Why all of us are required to insure our life or our property, how many types of insurance or insurance are there. If you also have some doubts about insurance or insurance, then you must read this post till the end because today we will know about all aspects of insurance.

As we all know that the life and property of any human being are surrounded by both death, disability and waste. Nobody knows what is going to happen to them the next moment. At the same time, such accidents can lead to huge financial losses. At the same time, insurance is a very good way to protect yourself from such a situation by which these risks can be overcome to a great extent.

At the same time, the entire responsibility of these risks is handled by the insurance company through these insurance schemes. Insurance saves us from many risks such as house fire, car accident, house theft. While some types of insurance also provide money for the treatment of your illness, at the time of your death, you also offer this insurance amount to your family.

At the same time, if you want to know more about what is insurance, then you have to read this article fully about what is insurance. With which you will get complete information about it. Then let’s start without delay.
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What is Insurance –

Insurance is a kind of legal agreement between two parties which is the insurance company (who gives insurance or insurer) and the second is the person (who takes insurance or insured).
In this, the insurance company promises that if something untoward or unforeseen event happens, then the company is the one to take responsibility of everything. At the same time, all the things that have been damaged will be completed by the company itself.

These types of incidents are called contingencies because there is no cure for these events when they are going to happen. In this, the insurance company has to compensate for all the losses as promised earlier.

Principles of Insurance –

When you buy insurance from the insurance company then the insurer (which is the company) and insured (which is you) gets a legal contract of insurance, it is called an insurance policy.
This insurance policy contains all the details about which you should know, such as all the conditions and circumstances under which the insurance company is going to pay you your insurance amount, if there is any loss then, if you do not then you have selected Gone nominee.
Insurance is a very good way to protect yourself and your family from any financial loss. It has often been found that the larger the insurance cover, the smaller the premium. This is probably because very few people claim this type of insurance, but they have to pay all the premiums for it. Therefore, the company has more profit in it.
Any person or company can apply to get insurance, but this type of insurance company decides what type of insurance to provide. For this, the insurance company thoroughly evaluates your application before making any decision. Most of the time, company refuses to provide insurance to high-risk applicants.
With insurance, the point is that you have to first choose what you need insurance on.
After that, the insurer calculates his risk, and only after checking everything, tells you how much premium you have to pay.

Choose Policy

An insurance policy is such a document that you have all the details written about it. Like what you get insurance for and whatnot.

Make Premium Pay

Premium is called the amount that you pay once every month or once a year according to your policy. Its amount depends on what this insurance is covering.


If something untoward happens within the insurance period, you or your nominee can claim their insurance. In this, you have to give full details of your accident which the insurance company checks and if your claim is correct from all the places then you get your claimed amount as was decided earlier.


Types of Insurance –

1. Life Insurance – Life Insurance
As the name suggests, your life is insured in life insurance. You buy life insurance so that even if you are not there, your family is not dependent on anyone and themselves are financially secured.
Life insurance becomes very important for those people when you are the only one earning in your family and the whole family depends on you.
2. Health Insurance –
Health insurance is taken to cover the expenses of medical treatments. There are also many types of health insurance policies that cover different diseases and ailments.
You can also take a general health insurance policy or you can also take a specific policy for a disease. The premium pay that is made in it covers all types of treatment, hospitalization and medication costs.
3. Car Insurance – 
In the same way, you can insure your car with Car Insurance. If any accident is to happen then you get its compensation.
4. Education Insurance – 
In this insurance, you are depositing money for the correct education of your child and when that time comes, you get a lump sum amount for the education of your child.
5. Home Insurance –
If you have built your house, then you must buy home insurance because if it causes any damage to your home, whether it is fire, natural disaster or anything else, you get your compensation in everything.
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Will you also get tax benefits from taking insurance –

There are more benefits of taking insurance, except for safety, security benefits. You also get tax benefits from this.
1. Life insurance premium can be claimed up to ₹ 1.5 lakh for a tax-saving deduction under section 80C
2. Medical insurance premium up to ₹ 25,000 for yourself and for your family, while ₹ 25,000 for your parents, you can claim under a tax-saving deduction under Section 80D
You have to make these claims at the time of filing e-filing income tax returns.

How to claim insurance –

Let us now know how you can claim your insurance amount.
=> For this, you must first make a claim against your insurance policy.
=> Now you have to provide all the details regarding your loss that you have suffered. It differs from insurance to insurance.
=> Then you have to submit all the bills/proof of your damage, loss, hospitalization, etc.
=> Now your work ends here, now the insurance company will verify your claim.
=> If your claim is proved correct then you get your claimed amount, according to your loss.

Insurance functions –

Insurance has evolved at the cost of a process that protects people’s loss and uncertainty. It is described based on a social device in reducing the loss of life and property.
Insurance promotes general economic growth in society so that the process of the society can run properly with stability. Insurance industries develop financial institutions that later help to reduce uncertainties and risks.
  • Provide Safety and Security –
Insurance provides financial support and along with it also reduces uncertainties in business and human life. It provides safety and security against any particular event. Since there is always the fear of sudden loss, insurance has a big hand in reducing it.
  • Generates financial resources –
Insurance generates funds by collecting premiums. These funds are invested in government securities and stocks. These funds are used in the industrial development of the country so that the economic development of the country can be done. Employment opportunities also get a boost.
  • Life insurance promotes savings –
Insurance not only protects you from risks and uncertainties, but it also provides an investment channel. Life insurance enables us to make systematic savings based on filling the regular premium. Life insurance also provides an investment mode.  It creates a habit of saving money in us. The lumpsum amount of premium is what we get at the end of the matured amount at the time of maturity. Therefore insurance encourages you to make savings.
  • Promotes economic growth  –
Insurance generates a significant impact on our economy by mobilizing domestic savings.
Insurance provides this accumulated capital as productive investments. Insurance enables it to mitigate loss, promotes financial stability and promotes trade, as well as promotes trade and commerce activities thereby ultimately providing economic growth and development. Therefore, insurance plays an important role in the sustainable growth of the economy.
  • Medical support –
Medical insurance is considered very important to manage the risk of heath. Because many of us can fall ill at any time, which can cost a lot. At the same time, if you have medical insurance, then it covers your big expenses which can help you a lot in such situations
  • Spreading the risk
Insurance helps in spreading our risk. With which it protects us from large losses.
  • Funds Collect has a great source
Large funds can be easily collected by premiums. These funds can be used in the development of the country, which leads to the economic growth of the country.

Benefits of insurance –

By the way, insurance brings immense benefits to any individual, family businessman, businesses as well as society. Let us know about some of its important advantages –

  • 1. Insurance provides economic and financial protection, insured person or thing that has been insured, that too in a nominal amount called the premium. At the same time, it provides financial protection to the nominee if the pre-matured death of an insured person occurs. Along with this, it also covers many losses such as loss of property due to theft, from a fire or from any natural calamity.
  • 2. At the same time, it reduces the risks of people, which otherwise could have caused big losses for them. Although it is not possible to completely remove the risks and uncertainties, it can be reduced to a great extent. That’s why the insurance company charges you a small premium to earn your risks.
  • 3. It helps in maintaining the standard of living of the people if any such unexpected loss occurs. It also protects us from an unfortunate financial crisis.
  • 4. Since we have to pay some premium in insurance, for which it gives us incentive on saving. Due to which saving becomes our habit.
  • 5. It protects us from being dependent on each other. So that you can live your life in your own way and empower us. This life insurance policy gives us full financial support if someone dies.
  • 6. It also helps in taking loans. If you have a policy going on, then you can take a loan from the insurance company based on that policy. In which this policy is kept according to the collateral.
  • 7. It provides new employment opportunities for all. In this modern era, hundreds of entrepreneurs and thousands of employees are engaged in this line.
  • 8. Promotes Foreign Trade. Insurance companies have a big hand in promoting international trade in a country. Because the insurance reduces the risks of these businesses, due to which they can do the export activities they want
  • 9. Insurance companies have a big hand in making businesses operate smoothly. Because it leads to loss of properties. At the same time, the motivation of the employees is increased by the insurance of the employees by the company.
  • 10. It helps in reducing inflation. To reduce inflation, the amount of money has to be reduced. While insurance companies take money from people at a premium, it helps to reduce inflation.
  • 11. These premium amounts are spent in many development areas such as trade and industry. Which leads to economic growth of the country.

Loss of insurance –

 Let’s know about the disadvantages of insurance –
  • 1. It does not compensate for all types of losses, so that it favors insurance with people, by insurance companies.
  • 2. Financial Compensation takes a lot of time to provide as it has to go through lengthy legal formalities in between.
  • 3. Although insurance encourages savings, it does not provide the same facilities as that provided by the bank.
  • 4. They intentionally think to compensate the insurer at least so that their profit can be maximized.
  • 5. It also promotes crimes in society, as most beneficiaries want to get the insured amount of policy.
  • 6. Sometimes, the total amount of premium is more than the maturity amount.
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Conclusion –

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