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Features
Ref. No. KLI/22-23/E-BB/492
Insurance is a financial contract that protects you from financial losses in exchange for regular payments. It protects against unforeseen events like accidents, illnesses, or property damage.
Insurance plays a crucial role in managing risks and uncertainties in our lives. It provides a financial safety net that helps individuals, businesses, and societies lower the impact of unexpected events.
Experiencing the financial consequences of these circumstances can drain your bank account. You might have to take money from your savings or your family’s hard-earned money. You and your family, therefore, urgently need insurance to be properly covered and financially supported against all risks associated with your life, health, and property.
While buying an insurance policy, one must wonder what insurance is. let us understand inusrance meaning and types, and benefits.
Insurance is a legal agreement between you and the insurance company. It protects you against financial losses. Insurance companies agree to pay you a predetermined amount if an insured loss occurs. This amount is known as the sum assured. There are various types of insurance available in the market, such as health insurance, motor insurance, term life insurance plan, and more.
Three components of insurance are mentioned below:
The premium is the amount that a policyholder pays to purchase the insurance policy. It can be paid monthly, quarterly, or annually.
It is the maximum amount an insurance company is liable to pay to its policyholder. This amount is based on factors like policy terms, losses, and others.
Deductibles are the amounts a policyholder agrees to pay out of pocket before the insurance company begins to settle a claim.
Insurance works on a very simple basis. Every policyholder pays a fixed amount (called premium) to get the insurance benefits and cover. Insurance provider use this pool of money collected from you and all the other policyholders and invest at multiple options to make sure the money grows. This money bank is used to pay out insurance benefits if any policyholder makes a claim.
Depending on the type of policy chosen, you may receive the sum invested (i.e. premium) and maturity benefits (applicable in endowment plans) or in most of the cases these policies last for a certain time period (called term of the policy) and you can only claim the losses within the pre-decided time period.
Depending on the need, various types of insurance plans are available. Life insurance, health insurance, vehicle insurance, property insurance, and business insurance are broad categories. Take a look at the sub-categories:
The main objective of buying an insurance plan is to be financially prepared if any unfortunate event happens. However, other benefits can be availed from an insurance plan:
Insurance can help you financially protect yourself and your loved ones from unexpected events such as accidents, illness, disability, or death. For example, if you have health insurance and get into an accident, your insurance will help cover the costs of your medical care. It can prevent you from going into debt or depleting your savings.
Some insurance plans, such as health insurance, can give you access to better care than you could afford. It is because insurance companies often negotiate lower rates with doctors and hospitals.
Insurance plans can help you manage and mitigate risks by spreading the financial impact of losses. For instance, family members might face a financial crisis in case of policyholders’ demise. Fortunately, a a life insurance plan would bear the loss, significantly reducing the financial burden on nominees.
In India, premiums paid for certain types of insurance, such as health and life insurance, are tax-deductible. It helps the policyholder to save money that can be used for other purposes.
Many types of insurance, such as auto and business insurance, are mandatory by law, ensuring legal compliance. This protects you and business organizations from legal consequences. Insurance contributes to economic stability by encouraging recovery from disasters and minimizing the impact of large-scale events on you and the economy.
Insurance is a vital tool for managing risks and uncertainties in our lives. The diverse types of insurance cater to different needs, providing a range of coverage options. Insurance benefits extend beyond financial security, offering peace of mind and legal compliance and contributing to overall economic stability. Understanding the various types of insurance and their advantages empowers you and businesses to make informed decisions about risk management strategies.
1
Insurance protects you from unforeseen events, resulting in financial security and peace of mind.
2
Premium is the amount policyholders pay to purchase the insurance policy.
3
Deductibles are the amount that a policyholder agrees to pay out of pocket.
4
You can choose the right insurance policy by assessing needs, comparing policies, analyzing the company’s reputation, evaluating premiums and deductibles, and considering CSR (Claim Settlement Ratio).
5
Term insurance provides coverage for a limited period with no cash value, whereas whole life insurance provides lifelong coverage and builds cash value.
6
Insurance cover is your financial safety net. It provides financial protection to you, or your family in case of adversities, such as death, accident, illness, or disability. In case of health insurance cashless treatments, pre and post-hospitalization, medical bills, diagnostic tests, and more are covered.
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Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
