Insurance : Types, Importance and Benefits

The life and property of an individual are very important and surrounded by the risk of death,  destruction/disability. These risks almost become the cause of financial losses. Insurance is a very good way to secure a company through an insurance company. In this article, we will cover the definition, types, and benefits of insurance.

What is Insurance?

A legal agreement between two parties i.e. the insurance company (insurer) and the individual (insured) is called insurance. In this agreement, the insurance company promises to make good the losses of the insured on happening of the insured loss or contingency.

The contingency is the event that causes a loss. This loss can be the death of the policyholder or damage/destruction of the property of policyholders. It’s called a contingency because there’s uncertainty regarding the happening of the event. The policyholder pays a premium in return for the promise made by the insurer.

Insurance and types of insurance

What are the types of insurance

The types of Insurance differ from country to country according to circumstances some common types of insurance are given.

Life insurance

As an alike name, life insurance is the insurance of your life. Life insurance makes sure your dependents are financially secured in the event of your untimely death. It is particularly important if your family is heavily reliant on your income if you are the sole breadwinner of your family. Under life insurance, the family of the policyholder has financially compensated in case of the death of the policyholder during the term of the policy.

Health insurance

Health insurance covers the medical costs of expensive treatments. Different types of health insurance cover an array of diseases and ailments. You can buy a health insurance policy for specific diseases or for general diseases. The premium paid for a health insurance policy mostly covers treatment, hospitalization and medication costs of policyholders.

Car insurance

Car insurance is an important policy for every car owner of the world. This insurance policy protects you against any untoward incident like accidents. Some policies also compensate for damages to your car during natural calamities. This policy also covers third-party liability where you have to pay damages to other vehicle owners.