Importance of Insurance

Life is unpredictable, and that’s exactly why you need insurance. No matter how efficiently and intelligently you save and invest your money for your future goals, one adverse event and all the planning can go kaput. When such unforeseen events strike, it’s insurance that helps bring back balance to your life. So, let’s take a closer look at the role and importance of insurance in having a stable lifestyle.

But before that, it is important to understand what exactly insurance is and how the whole system works. An insurance policy is essentially a legal contract between you and your insurance provider. When you buy a policy, you promise to pay a small amount of money at fixed intervals of time to your insurer (known as premium amount). In return, if you suffer a loss that’s covered by your insurance policy, your insurer offers you financial assistance by compensating you for the damages/losses suffered (as per the terms outlined in the policy).

The most common types of individual insurance policies include life insurance, health, motor and home insurance. Businesses also need certain insurance policies to insure themselves against specific types of risks they face.

The importance of insurance in India especially is undeniable and immense. Find out how buying an insurance can change your life for the good and why you should not delay buying it any further:

1) For a sense of security:

When the earning member of a family passes away, life gets extremely tough for the remaining family members. In such a situation, a life insurance policy can make a whole lot of difference. Without insurance, the family might eat into its old savings for their survival, or depend on others for financial support. But if the deceased had insured himself by way of having a life insurance policy in his name, the family would rightfully get a financial lifeline from the insurer in the form of either a one-time corpus of money or regular payout. This gives a sense of peace and security in the mind of the policyholders that the future of their families is secured even in their absence.

2) Promotes savings culture:

Besides providing you a safety net, insurance also offers an investment opportunity. In certain types of life policies, the premium payment acts like systematic savings. And the policyholder gets a lump sum amount at the time of the maturity of the policy.

3) Healthcare support:

Health Insurance policies are extremely important in today’s time when medical costs are seeing an upward spiral. Adequate medical insurance for you and your family can compensate you for the expenses incurred from the treatment of various health conditions and help you absorb any financial shock.

4) Protecting valuables:

Life and health insurance are a must today, but the importance of general insurance is also no less. General insurance helps us protect the things we value, like our houses, cars, gazettes, appliances, valuables, etc. from any kind of risk such as theft, fire, natural calamity, among others. We can choose a suitable policy for the asset we want to protect and safeguard our finances against any unforeseen repair or replacement expenses.

5) Additional benefits:

Apart from paying for the losses and damages suffered, different types of insurance policies can offer different kinds of supplementary benefits. For instance, a motor insurance policy can offer benefits like free roadside assistance, or premium paid towards life and health insurance policies can help you save taxes.

6) Legal compliance:

In certain situations, buying insurance is mandatory and not doing so can invite legal troubles for you. For example, all vehicle owners in India compulsorily need to buy a third-party liability-only motor insurance policy. It covers any financial loss or damage caused by the insured vehicle to a third person or property. Similarly, certain businesses are required by law to have insurance in order to protect their workers’ compensation.

Conclusion

While buying an insurance policy at first can seem to be an extra expenditure, it can prove to be totally worthwhile at the time of an unexpected crisis. What’s even better is that insurance policies can suit every budget and need as they can be tailored as per your requirements. So assess your purpose, requirements, financial standing and life stage, and then choose an insurance policy that ticks all the boxes.

Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.