Insurance – Backup For Uncertainty In Future
World is full of uncertainty and no one knows what could happen in future. Life is never predictable and therefore one can never predict his or her future. Actually our life has became so much punched with poor health due stress, depression, workload and poor lifestyle that none of us can determine our life span and therefore it becomes too stressful when we think of our family member who are totally dependent on us. If some uncertain casualty happens to us in future, whether physically or financially, what would happen to those who are dependent on our shoulder? This uncertain casualty could demolish them or break them into pieces. Though nothing can guarantee a safeguard from uncertain casualty but there is one thing which guarantees us safeguard to our dependents if something happens to us. Insurance is that plan which insures that our dependent will be safe and prosperous after us.
Insurance – Basics to Understand
Insurance is a sort of risk management where a insurer transfers a certain amount to the insured person or entity for the loss of incurred in favor of the monetary compensation paid to insurer for a prescribed time period known as Premium. Insurance is a plan which protects an individual, entity, business or a group from casualty or losses of life, health or finance in respect of a affordable amount paid. Insurance allows one to feel free from stress of uncertain losses in future by paying just small amount and receiving risk free life. Insurer with the respective amount paid by the insured i.e. premium insures that if the insured person or entity met any loss which is prescribed and mentioned while insuring then the insurer will pay the casualty amount or the insured amount to the insured person or entity.
Losses covered in Insurance –
- Financial protection to family after insured person’s death.
- Insured repayment of debt after the death of insured debtor.
- Protection against contingent liabilities
- Financial protection to the family of employee after his or her death while service.
- Protection against the uncertain situation after the death of partner or co-shareholder in a business.
- Financial backup while loss in business or entity
- Protection against uncertain health or medical expenses.
- Protection against theft or fire or natural hazards.
- Protection against legal affairs or law suits.
- Protection against physical disability
- Protection of vehicle against accidental or theft losses.
History of Insurance –
Insurance is a very ancient practice of financial transaction and cover and has been practiced since many era and periods. In ancient period, insurance was first introduced between Chinese and Babylonian merchants. During this period Babylonian invented a system in 1750 BC where they claim to have extra amount in their fund from the merchant for safely delivering the goods. Later in medieval period, Sultan of Anatolia in 12th century invented a system for the safety of traders. According to this a trader will be paid for all his losses if he has been robbed in the territory. Modern Insurance pattern officially came into existence in 1830 with the establishment of New York Life Insurance with its initial life insurance plan.
National Insurance – Insurance in India
There is vast and deep root of insurance in Indian culture and history. Though there is no official note of existence of insurance in India in ancient period but it is said that insurance came into existence over millions of year ago where king funds and benefits his countrymen against natural hazard or destruction during enemy attack uin favor of taxes. Well officially insurance came into existence in India in 1818 with Oriental Life Insurance Company in British Empire. But after independence and formation of Constitution of India on 19th January 1956, Life Insurance Corporation of India was formed. After that this sector never stopped and keeps rising day by day. Today India is one of the major countries for Insurance Company functioning and there are more than hundred of insurance companies functioning in India. Indian government allows 49% of Foreign Direct Investment in Insurance sector.
Major Types of Insurance –
Here by are some of the major insurance plans functioning in India.
- Whole Life Insurance – Within this plan the insurance company collects the premium from the insured person for the whole life or till the retirement and pays back the assured amount to his or her family only after the death of insured person.
- Term Life Insurance – Within this plan the insured person is depicted to pay premium for a prescribed term period such as 10 years or 15 years or 20 years or 25 years and after the term period he or she is paid back the assured amount. In case the insured person dies before term completion then his or her family will receive complete amount.
- Child Insurance – This insurance is meant for the children of below 18 years of age who are dependent. Within this plan, guardian of the child runs the policy and payoff the premium in respect of the child. Child receives the amount after the completion of term period.
- Health Insurance – Within this plan insurance company is liable to pay off the expenses implemented on the health or medical treatment of the insured person.
- Vehicle Insurance – Within this plan the vehicle is ensured against the accidental loss or hazards.
- Fire/Marine Insurance – Within this plan the insurance company guarantees to protect the losses against the fire hazard or water hazard.
Investment Plan –
- Pension Plan – More than a insurance this an investment plan. Insured person is liable to payoff certain amount of premium and during the service term and after retirement he or she receives prescribed amount every month in sort of pension or salary by insurance company.
- Endowment Plan – Within this plan, insurance company pays you back certain part of your investment after every 5 years. In respect, you have to pay certain amount of premium every year for prescribed term period.
- Money Back Plan – This is almost similar to endowment plan as you similarly get paid certain part of your investment after every 5 years.