What is Insurance ? Importance and it's types

 What is Insurance ? Importance and it's types

Meaning of Insurance;

Life is full of risks and uncertainties. This risk cannot be measured completely but can be measured With the help of insurance. Insurance can be defined as agreement between insured and insurance company in which insurance company agrees to compensation in case of loss or expiry of time period in consideration of insurance premium.

Important of insurance

 

1. It's Provides Economic protection to the insured.

2. It helps to promote Foreign trade.

3. It's Helps to operate business smoothly by providing financial compensation in case of loss or damages to the properties of the business.

4. It helps to reduce inflation.

5. It helps to provide capital in form of premium form various persons and organizations.

Types of Insurances :

1. Life insurance

2. Non - life insurance

1. Life insurance :

Life insurance is the written contract between insured and insurance company in which insurance company agrees to give compensation in case of loss or expiry of time period in consideration of insurance premium.

Types of life insurance:

1. Whole life insurance:

It is the insurance which covers whole life of insured. Under these insurance , the insured has to pay insurance premium through out the year. Compensation is received after the death of insured or expiry of time period.

2. Endowment life insurance:

The endowment policy is issued for s fixed period of time , say for 15 years , 20 years or 25 years. The premium is payable during the insured period only.

The sum assured is payable to the policyholder on the maturity of policy.

3. Anticipated endowment life insurance:

Under these policy , a part of the sum assured is paid at certain interval during the endowment period. For example , if the policy is issued for 15 years , 25 % of the insured amount is paid after 5 years , 25% is paid after 10 years and remaining bonus is paid after 15 years.

3. Children's education and marriage life insurance:

Education and marriage of the children are costly affairs for every parent. Such financial burden burden can be minimize by talking children's education and marriage endowment life insurance policy.

4. Term life insurance:

The term life insurance policy is issued for short - term period ranging form 3 month to 7 years. Under these , the sum assured is payable only on the death of the policyholder.

2. Non - Life insurance :

All others insurance except life insurance is called non - life insurance. In simple , it refers to the insurance of goods and properties.

Types of Non - Life insurance:

1. Fire insurance:

Fire insurance is the types of insurance which covers the risk of loss which is caused due to fire accident.

2. Marine insurance:

Marine insurance is the types of insurance which covers the risk of loss which is caused due to loss perils of the sea in course of sea voyage.

3. Motor insurance:

Motor insurance is the types of Insurances which covers the risk of loss which is caused due to accident , theft and other similar types of events.

4. Aviation Insurances:

Nowadays , air transportation has become a popular means of transportation. So it is the types of Non life insurance which cover the risk caused due to plane crashes.