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Insurance is an effective way to guard against financial loss. It is a method of risk management that is primarily employed to protect against the risk of a potential loss. An organisation that offers insurance is referred to as an underwriter, insurer, insurance business, or insurance carrier.
There are many different insurance policies available, each designed to protect particular facets of your health or possessions.
Broadly, there are 8 types of insurance, namely:
- Life Insurance.
- Motor insurance.
- Health insurance.
- Travel insurance.
- Property insurance.
- Mobile insurance.
- Cycle insurance.
- Bite-size insurance
Every insurance in itself provides a lot of benefits to individuals and safeguards them from any financial loss.
Benefits of Insurance coverage:
- Gives protection– Insurance does lessen the effect of loss that a person experiences in dangerous circumstances. In times of financial hardship, it offers financial compensation. It not only shields the insured from financial difficulties but also aids in reducing the mental tension that results from them.
- Risk sharing– The fundamental nature of how insurance policies work makes them a cooperative system. An insurer wouldn’t be able to make a payment using their capital. A huge number of people are covered by an insurance firm, which pools collective risks and premiums. This fund is used to reimburse the claimant who has insurance coverage. As a result, the risk of the policyholder who really sustained the loss is shared by all policyholders.
- Cover against Uncertainties– It is among the most prominent and significant advantages of insurance. According to the insurance plans, the insured person or organisations are protected against losses. The correct kind of insurance coverage might help you protect yourself from losses brought on by various life’s uncertainties.
- Investment Opportunities– A portion of the premium for the unit-linked insurance plan is invested in various market-linked funds. They make it possible for you to consistently invest money to benefit from market-linked returns and achieve your life goals in this way.
- Tax benefits– There are tax advantages for every insurance you choose to get. For eg- Life insurance- under Sections 80C and 10D of the Income Tax Act. A life insurance policy’s premiums can be written off under Section 80C up to a maximum of 1.5 lakh, and Income on Maturity is tax-free under Section 10(10D) if the premium does not exceed 10% of the sum assured or the total assured is at least 10 times the premium.
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