Insurance is a contract to protect your financial assets in times of crisis. Individuals can have financial protection in the event of an unexpected loss. An insurance policy is a contract between an individual and an insurance company. Under this contract, the individual pays regular premiums to the insurance company, producing the sum insured in the case of an unforeseen event like death, injury, or damage to vehicles or other personal property.

Unfortunate events such as accidents, illness, or natural disasters can happen at any time. It is important to protect yourself and your family from these unplanned events. An insurance policy is one of the most cost-effective and easiest ways to protect yourself against financial loss.

Insurance is a legal contract between the policyholders and the insurer. The insurance policy details all aspects and conditions that the insurance provider will pay the policyholder (or their nominee) the insurance amount in the event of an unforeseeable event. Insurance is a financial tool that can help you protect your finances and your family. The policyholder (also known as the purchaser of the policy) pays the premiums to cover the coverage provided under the policy. Anyone can get insurance through an insurance company.

There are several types of insurance available in India. The three most common types of insurance bought in India are as mentioned below:

Motor insurance

Motor insurance policies are a type of insurance policy that offers financial assistance in the case of an accident involving your vehicle. Motor insurance is available for the following vehicle types:

• Commercial vehicles
• Four-wheelers owned by individuals
• Two-wheelers owned by private individuals

Three types are available for motor insurance in India. These are Third party liability coverage, comprehensive cover, and own stand-alone damage. A person can select the right motor insurance according to the vehicle coverage required. Motor Vehicles Act of India requires that every vehicle have a third-party motor policy.

Health Insurance

Insurance policies covering health provide financial assistance for policyholders who need to be admitted to the hospital to receive treatment. Some insurance policies will also pay for treatment at home before hospitalization or discharge. India offers a range of insurance policies, including Individual Health Insurance or Family Floater Plans.

Life Insurance

Life insurance is an agreement between an individual with an insurance company. The insurance company promises to provide a sum (death benefit) to the family of a life assured in case of unforeseeable death. Under select life insurance plans, a maturity benefit, which is a sum assured, is paid to the life assured upon maturity. Insurance companies in India offer the below-mentioned insurance plans:

• Term Life Insurance
• Unit-Linked Insurance Plans ULIPs
• Child Protection Plans
• Money Back Plans
• Retirement Plans
• Endowment Plans

Two methods are available to you in making a claim.

Cashless claims:

Get in touch with your insurance and inform them about your claim. The insurer will guide how to settle your cashless claims, depending on which type of insurance (motor/health). In the case of motor insurance, the insurer will provide details about a nearby cashless workshop. You can pay your share of the repair costs. If you have health insurance, your TPA help desk can be reached at the time of hospitalization to make a cashless payment.

Reimbursement:

In the event of the non-availability of a cashless institution, you can file a claim for reimbursement. For motor insurance, you will need to pay the entire amount of the claim upfront. Then, after informing your insurer about the claim, you can get it reimbursed by the insurer. For health insurance, you must first pay the total bill amount to the hospital. Then, after notifying the insurer, get it reimbursed by your insurer.

Insurance policies not only provide financial protection for unexpected losses but also offer income tax benefits. One can enjoy these tax benefits by purchasing an income tax policy: Section 80C. Premiums paid for life insurance policies fall under Section 80C. This section allows for tax exemptions of up to Rs. 1.5 Lakh. Section 80D. Premiums paid toward a health insurance policy are eligible for tax exonerations under Section 80D. Section 10 (10D).

Benefits received under a life insurance policy are exempted from tax under Section 10 (10D).

Premiums for health insurance plans can be deducted up to Rs. Section 80D, Income Tax Act. These plans are eligible for an additional Rs. 25.000 tax deduction for premium for parents' Mediclaim insurance (Rs. 50k if parents are seniors

Important Components of an Insurance Policy

The following components are intended to help you understand the basics of insurance and how it works:

Premium Amount:

The premium is the agreed amount you will pay to insure your policy. You can make regular payments monthly, quarterly, or half-yearly. Insurance providers use some factors to calculate the premium on an insurance policy. It is designed to verify that the insured person is eligible to purchase the type of insurance policy they wish.

Policy Limit:

The policy limit is the maximum amount an insurer will pay for losses covered by an insurance policy. This is determined by policy tenure, loss, or other factors.

Deductibles:

In an insurance policy are the amounts the policyholder must pay before the insurer settles the claim. According to the policy's terms, deductions will be applied.