Insurance – overview, types of insurance, how insurance can help protect your family financially!
Insurance is the legal accord between two parties, the insured and the insurer. Based on the agreement, the insurer offers financial coverage to the insured for all losses incurred under specified circumstances.
No matter how healthy we are, how sound we are financially, and how well we drive, we all need insurance because it acts as the safety measure that financially protects our families and us during hardships. Let us discuss insurance, types of insurance, and how it protects our family financially.
Insurance – An Overview!
Insurance is defined as a contract or agreement in the form of financial protection policy. The policy covers the financial risks of the insured under any specified circumstances. The insurer is the policyholder, while the insurer is the company offering the coverage. The insurance company offers financial coverage or reimbursement to the insured or their family under different circumstances.
The insured pays premiums to the insurer to insure their vehicle, health, and life for a specific period. In return, the insurer will take care of the financial hardships during difficulties. The insurance is to transfer the risk of financial loss to the insurance company by paying a small fee as premiums.
What are the Types of Insurance?
- Life Insurance – Life insurance is the policy that protects the family financially after the insured expires. You pay a premium to the insurance company for a specific period. In return, the insurance company agrees to pay a sum assured to the family when the policyholder dies before the termination of the policy. There are different types of life insurance available, where some policies offer a lump sum amount to the policyholder after the policy tenure if they survive. Some policies only provide a sum assured money to the families of the insured if they expire during the policy tenure.
- Health Insurance – The policy ensures the insured and their family member gets medical assistance whenever needed without worrying about the costs. The health insurance policy ensures that the insurance company bears the cost of medical treatment of the insured and their family. The insured needs to pay a regular premium to the insurance provider, and in return, they promise to pay off all the expenses related to medical treatment and illness. It includes daycare, hospitalization, pre, and post-hospitalization expenses, and more.
- Liability Insurance – It is the type of insurance bought to insure liabilities, assets, properties, businesses, and cars. Under the liability insurance policy, the insurance company will compensate the policyholder for any damage incurred to the insured asset or object during the policy tenure.
How Does Insurance Protect Family Financially?
Regardless of your monthly income and savings, an unpredicted situation can burn a hole in your pocket while jeopardizing the financial future of your loved ones. People without life insurance may put their family and loved ones in financial hardship after their dismissal.
However, no amount can compensate for the loss of a loved one. Still, life insurance can help your family deal with financial hardship after your unexpected dismissal. Besides, if you and your family are not covered by health insurance, the expensive medical treatments and huge bills can shake your finances. So, it is important to stay covered with insurance policies.
The insurance premium you pay to the insurer is the price that promises that the insurer will cover all the losses and damages resulting from an unforeseen event. Knowing that your risks are covered brings peace of mind.
Suppose you die untimely with many pending milestones, like children’s education, their wedding, and retirement corpus for your spouse, along with a housing loan. In that case, the insurance can be a boon for your family after your unexpected dismissal. It will help the family keep sailing through the financial hardships effortlessly.
Regardless of your efforts to improve your life, an unforeseen event can change things upside down, leaving you financially, emotionally, and physically strained. So, having sufficient insurance policies can help you reduce stress as you have a backup for your family who can deal with financial hardship efficiently when you recover.
Hopefully, it is clear that having insurance policies, whether liability, health, or life insurance, is an integral part of financial planning. It protects you and your family members during financial hardship. But, you have to keep three important things in mind when choosing insurance policies, benefits you get from the policies, requirements, and ability to pay the premium.