With the number of uncertainties that we are living with, it’s obvious that we want to do something about coping up with them. Insurance is one such way to ensure that incase of any unforeseen circumstances, you won’t suffer huge losses.
It is a pact by the organisation providing insurance, between the insurer and the insured, that means a promise by the insurer to make good the losses of the insured in return of a payment known as premium, which has to be paid periodically by the insured as per the conditions of the insurance taken.
There are various things associated with an insurance policy and listed below are few of the most important pointers.
1.About the policy
While selecting any kind of policy, there are certain keywords that you hear about it which attracts you towards it. Some of these are premium, its coverage, the type of insurance it takes care of etc.
Premium is the most important aspect of taking a life insurance. Therefore, you must know before starting any policy about its premium payment policy i.e., whether it is monthly, quarterly or yearly. It is basically calculated based on the insured’s or item’s life, credibility of the insured etc. Like in case a younger and healthier person is taking insurance, his premium is likely to be lesser as compared to a person who comes under senior citizen category due to the different life expectancy. Also, in case you are taking vehicle insurance, a new driver’s premium amount will be more as compared to an experienced driver.
How much damage can you recover from the policy is another important aspect of insurance policy. In case of life insurance, full amount is given to the beneficiary as life can’t be measured in terms of money. However, in case of other insurances whose damage can be calculated in terms of money, only that amount, of which the damage has taken place, can be claimed by the insured.
Even when you have suffered the loss, getting the claim isn’t as easy. The insurance company will first verify your claim with proof provided by you and then you’ll be able to get your claim. The expenses born to finally get to the claim are known as deductibles. Those policies that demand high deductibles are likely to be cheap as compared to other policies for it already demands other expenses.
2 Types of life insurances
As the biggest uncertainty that surrounds us is our own existence, a plenty of types of insurance policies have been introduced in order to attain to our needs and reduce the fear of that uncertainty to some extent.
This type of insurance policy is for a specific period of time and is relatively cheaper as compared to other policies. On the event of demise of the insured, the nominee can claim for the coverage as they give full coverage. However, in case the insured outlives the term for which the policy was taken, there are no returns unless he extends it with the company.
Unit Linked Insurance Plan
This type of insurance plan is a combination of both investment as well as insurance. The insurer has to pay the sum assured by the plan to the nominee on insured’s death or maturity of the policy. Since its investment related, its performance is market based and therefore one might even incur losses on their money invested.
These are also investment and insurance policy combined. However, the market doesn’t rules this plan. On maturity of the policy or death
Of the insured, the sum assured along with the profit earned is paid to the nominee. However, they charge higher fees for investing in market securities.
Money back policy
This is the type of policy wherein a specific amount of money is paid to the insured at periodic intervals and the balance amount is paid after the death of the insured to its beneficiaries.
Whole life policy
In this, the insured is relaxed and enjoys some amount of money which is paid to him by the insurer. Since there is no defined term or let’s say, the period is infinite, once the insured dies, the remaining amount is paid to its beneficiary.
3.Must have insurance policies
We discussed about the key components of insurance policy and the various types of life insurance policies. Now when we come to think of the policies, that should be taken by individuals right away are:
The biggest uncertainty that surrounds is our own existence and therefore one must always insure themselves with a life insurance as per their needs so that in case of their demise, their beneficiaries don’t have to suffer much monetary issues.
We have heard of the saying that says if health is lost, something is lost. The expenses of the health issues that is cropping up now days in unimaginable. Therefore, it’s always advisable to have a health insurance that will cover up the hospital expenses in case such a situation comes up
The vehicle we drive, be it car or a two wheeler, is very much dear to us. In case of any accidents, there’s huge amount of money required for the repair. Therefore, one must always have an insurance ready, just is case something unforeseen happens to avoid more damage to oneself.
There are few more insurance policies around but these are the basic and most needed ones. In case you feel the need, you can go for other policies too. But remember, to know all the details carefully before buying any insurance plan as that is also a sort of investment.