Insurance is a contract between the Insurance Company and an individual/firm (Insured), to cover the risk on life and property. By taking a policy from an Insurance company, the insured is promised an assured sum by the Insurance Company.
The document detailing the terms and conditions of insurance cover is called Insurance Policy. The Insurer has to pay a sum called the premium to the Insurance company, at regular intervals.
Insurance Company is responsible to compensate only those risks stated in the policy and the compensation will be equal to what is mentioned in the policy. A policy defines the terms and conditions applicable to both, the Insured and the Insurance Company.
The liability of the Insurance Company to pay compensation ceases after the expiry of a policy. Policy will get lapsed if insured fails to pay the premium. The person named to receive compensation in a policy is called the beneficiary. In case of death of Policy holder, compensation will be paid to the beneficiary.
Insurer will get compensation only when policy is valid. The Insurance Company’s obligation to pay compensation will not extend beyond the period of policy. The policy will get cancelled, if the insurer discontinues premium payments to the Insurance Company. While insuring, a beneficiary is named in the policy. If policy holder dies, the named beneficiary will be paid the assured sum by the Insurance Company.
Insurance Companies issue different types of policies. Some of the common policies are Life Insurance, Auto Insurance, Healthcare insurance and Travel Insurance.
Individuals insure themselves, or their family members to cover their life and such policy covering the risk to an individual’s life, is called Life Insurance. Under this policy, the Insurance Company pays compensation in the event of death of the Insurer. Disabilities are also covered, along with death in quite a few policies. If the bread winner of the family is an insured, the compensation family gets on the event of his death, will be of great help to the family.
Under Life Insurance different kinds of policies are available. These policies are known as term policy, endowment policy, money back policy and whole life policy. Though risk coverage is same, payment terms and period of policy will be different for these policies.
Home Insurance policies will cover risks of the property owners in case of loss due to natural calamities, riots, theft and fire occurs to their properties. The compensation payable will be as mentioned in the policy.
Risks to vehicles are covered by an Auto insurance policy. Risks like accident, theft etc are covered under this. Third party insurance that covers compensation to accident victim, is also an Auto insurance policy.
Travel insurance is a cover provided to travellers against loss of their valuables while travelling. Health care is a costly affair. Insurance companies take care of hospitalization of the Insurer in certain specified cases.
We are facing a lot of risks in everyday life and insurance cover is a great relief. Before taking a policy terms of policy has to be carefully examined to make best choice. Information on different types of policies can be obtained from net or authorised agents.
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