Insurance Definition | Insurance classification | Importance

Insurance simply means a contract that is made between an individual or entity to get money when they have a loss of something which was insured.

In simple words suppose you did insurance of a car and somebody stole it from you now if you have all the proof that that car was yours, You will get a compensation amount equal to your stolen car’s monetary value in case it is not recovered.

Classification

1.General insurance

2.Life insurance

General insurance

General insurance is a type of insurance under which you can insure almost everything other than death, such as car, house, travel etc.

Some parts of general insurance are as follows.

• Motor Insurance- All the vehicles like two wheeler, four wheeler or the vehicles that are commercial comes under the motor insurance means in case of any accident you will get money.

• Property Insurance- Home, building, office, shop etc. Comes under this insurance it means that in case of any physical damage either by nature or human made calamity, such as fire, tornado, earthquake, robbery, burglaries etc. you will get money to repair it.

• Health Insurance- It provides financial support to policyholders when they are admitted to hospitals for treatment. Health insurance is of many types like individual health insurance, group health insurance, critical illness insurance, Senior Citizen Health Insurance etc.

• Travel insurance- It provides financial support to policyholders in case of loss of baggage, flight cancellations, loss of passport, personal and medical emergencies. There are different types of travel insurance Which covers domestic or international loss. They are as follows Individual Travel Insurance, Student Travel Insurance, Family Travel Insurance, Domestic Travel Insurance, International Travel Insurance etc.

Life insurance

As the name suggests it is about life. In this type of insurance, if you or a member of your family dies or someone becomes disabled, then you or your family will get financial support.

Some parts of general insurance are as follows.

• Term Life Insurance- In term life you get insurance for a specified period only. In this type of insurance financial support will be provided to your family in case of death.

• Whole Life Insurance-In whole life you get insurance for lifetime. In this type of insurance financial support will be provided to your family in case of death.

• Child Plans- In this type of insurance your child will get financial support at the right age for his future such as higher study or marriage etc.

• Retirement Plans- It is also known as pension plans. As the name explains in this type of insurance you will get financial support after you retire.

Insurance importance

The world we live in is full of uncertainties and risks. Nobody knows what will happen tomorrow, no one knows if you will survive tomorrow or not, I know my words are bitter, but this is the real truth of our world and that is why we must do insurance so that if anything happen to you tomorrow then your family member will get financial help. I know that money cannot reduce pain but it is better than nothing.