Insurance and everything you need to know about it

You buy a top of the line phone for ₹150,000. But by a cruel twist of fate you lose that phone. You panic on having lost ₹150,000, but then you remember that you had bought insurance for that phone and your mind is then put at ease. This can help you to avoid huge financial losses when faced with damage and theft. Insurance can be obtained for almost absolutely anything. Let us jump in and try to understand all about it today. Also read How to not invest like Mike Tysone

What is insurance?

Insurance is a contract between an individual/entity and the insurance company, in which the company promises to make good the financial losses incurred by the individual/entity. For this protection, a small sum called a premium is paid by the individual/entity.

Types of Insurance

Insurance can be obtained for almost anything. For instance, Lionel Messi, the famous footballer, had his left foot insured for $900 million. Today we will look at the major types of insurances. We will cover each type of insurance in detail in subsequent articles.

1. Life Insurance

Suppose a person is the sole breadwinner of the family, the person’s death would financially cripple the family. To prevent the family from undergoing such hardships, a person can take life insurance wherein the family would be provided financial assistance on his/her death.

2. Motor Insurance

Motor Insurance refers to a policy that offers protection from accidental damage to a motor vehicle. The insurance may cover two-wheeler, four-wheeler and commercial vehicles.

3. Health Insurance

This provides financial aid and assistance to to policyholders when they are admitted to hospitals for any treatment. Some comprehensive plans also cover pre and post hospitalization expenses.

4. Travel Insurance

A must for travel enthusiasts. It is a short term policy. The policy covers the traveller from financial losses during a travel. It can be taken for both domestic and foreign travel. You can also insure your home when you are traveling.

5. Property Insurance

This can be taken for any building (commercial or residential) or immovable structure. This insurance covers not just the property, but also the contents/items inside the property.

6. Mobile Insurance

With the prices of mobile phones shooting up, a new form of insurance called mobile insurance has been introduced. This can be used to claim money spent on repairing your phone in case of accidental damage. Some policies also cover theft.

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