When we talk about insurance, the first thing that comes to our mind is ‘What is insurance?’ Insurance is an arrangement by which a company or a state provides a guarantee of compensation for the specified loss, damage, death in return of payment of a specified amount. Insurance basically provides protection against unforeseen situations. Need of Insurance Insurance helps people to manage risks. When we buy insurance, we lend the burden of bearing losses to the insurance companies but the insurance companies charge fees for their service in the form of premium. Insurance can help us – To own a home: Buying a home is a big headache for anyone and the bigger headache is to protect it. Insurance companies protect us from the losses incurred during renovation, repairs,replacement of any damage, theft, perils like water, fire, etc. To take care of one’s health: The insurance companies help us to cover our health care costs that increase during visit to dentist, vision Care Centres, cost of medicines and other health facilities.
To run a small business: Many a times people are scared to start a new business because of the expenses during the initial years like managing the risks of ownership, retirement plans of employees, business and employee coverage, etc To protect one’s family: Often the breadwinner of the family is scared of the situation that may arise after his death and the problems his family might face. So, the insurance companies have plans to maintain their lifestyle, mortgage, cost of education of children, etc. Currently there are 24 insurance companies in India out of which only LIC of India is the government owned company else other 23 companies are either exclusively private business or awned by the two privately owned business companies in partnership.
5 Must Have Insurance Policies are as follows:
● Long term disability insurance: Though there are chances of people falling in the trap of long-term disability, people tend to ignore it. But they forget that instead of having a ‘nothing will happen to me’ attitude, they can simply buy a disability policy. One cannot always depend on the current earning power, you need to have a plan that provides you the same lifestyle as the current one in the future, in case you can no longer continue to work.
● Life Insurance: Life Insurance is generally for the people that are financially dependent on you. If by any chance someone dies suddenly, the insurance can help the family to maintain their lifestyle. A person can estimate his annual income and purchase a policy that can replace his income after his sudden demise.
● Health Insurance: The reason for high Hospital bills is enough for having Health Insurance. Even a simple visit to a doctor can affect your monthly disposable income. So one should buy Health Insurance so that they don’t need to worry about the payment when they are lying on the hospital bed and injuries that require surgeries can quickly rackup the five figure cost.
● Homeowner’s Insurance: Replacing a home is a big and costly task. Homeowner’s insurance should be able to bear the cost of replacement of home and its content as well as the cost of living somewhere else while the home is being repaired. It does not have to include the cost of land, keeping in mind that you already own it.
● Automobile Insurance: Mostly, law demands for automobile insurance. If you meet an accident and someone is injured or their vehicle is damaged, he can file a lawsuit which might cost you everything you own. That is why it is advisable not to skip the automobile insurance. But one should make sure that he buys the insurance policies carefully as they are available in different shapes and sizes and offer different benefits .