Major Pros and Cons of Insurance Policy that you should look for

Insurance– A short intro

Insurance is a protection plan that will provide you financial security in uncertain conditions. There are many types of insurance plans that you can take from any private company. Insurance companies are regulated by the state government. You can insure any object including your car, mobile phone, house, shops, jeweller or any object having financial value. you have to pay a premium monthly and can take the reimbursement of financial loss. There are numerous insurance companies available in the market, offering a wide range of benefits in their insurance plan. If anyone is taking insurance for the first time then they must have to check several quotes online and compare the provided benefits prior to purchasing.

The three main components that you have to keep in mind while purchasing any insurance plan are premium, policy limit and deductibles. The premium of the policy must be low so anyone can easily afford it. Policy limit should be high so that it can cover the maximum expenses. Deductibles should be low so that customers will receive the extreme benefit at low price.

The major type of insurance policy is:

  1. Life insurance: It will provide financial security to the family of the insurance holder. If he passed away due to accident, medical issue or any other unforeseen circumstances. Insurers have to pay a fixed amount of money to the insured person or his family after the death of the person or after a fixed period of time.
  2. Health insurance: It provides the medical expenses of the insured person and his family if they are covered in the insurance plan. In health insurance you have to pay a fixed amount annually. It will cover your surgeries, medicines, check-ups, room rent, day care, Outpatient department, maternity and many other facilities depending upon the plan you have taken.
  3. Car insurance: These days cars are a major and costly thing everyone wants to purchase. But if you ever meet with an accident or have to spend money on repairing a car then the bill is too much expensive. So, if you have a car then it is also important to have car insurance. So that you don’t have to pay the repair bill from your pocket.
  4. Marine insurance: Marine insurance will protect you from the loss of marine perils. It will include collision of ship or cargo with rock, destruction in ship, attack by enemies, disappearing of ship or captured by pirates.
  5. Fire insurance: You can do fire insurance to recover the loss caused due to fire in your shop, houses, factories. The reason for fire can be short-circuiting, human activity or natural calamities. You will get the amount of loss from the insurance company for reconstruction of property.
  6. Property insurance: Property insurance will recover the loss caused to your property due to climatic occurrences, accidents, fire or theft. 

Importance of Insurance:

  • Insurance provides mental peace.
  • Having an insurance plan will stabilize your family and business at the time of any financial misfortunes.
  • It will also encourage saving and help you to save your hard-earned money
  • It will transfer the financial risk caused to any individual to the insurer.
  • Medical expenses are too high, so insurance will help your family financially in case of unpredicted medical emergencies.
  • If you have to pay a high tax amount to the government then you can also get a discount on tax if you have an insurance policy.
  • Having an insurance policy will also help to reduce the inflation rate of the country.
  • Having an insurance policy will also help you to run your business smoothly.

Disadvantages of insurance: Apart from all the importance. There are also several drawbacks to the Insurance.

  • The complexity of insurance policy: The policy is so hard to understand that they can easily manipulate an uneducated person. So, you must need an expert to know every point of the condition carefully.
  • Lengthy formalities: You have to follow lengthy formalities, visit various offices and it will take a lot of patience for settlement.
  • High deductible: If you will ask for more benefits from the insurance company then they will increase the premium for every extra facility and also deduct extra charges for those benefits.
  • High premium cost: The premium cost is too high for some of the insurance companies, that a middle-class family cannot easily afford it. So, you have to choose wisely for a suitable plan in which you will get maximum benefit at a nominal premium cost.
  • Risk of getting cheated: there are many fraudsters or brokers also available in the market, who will take money on the name of insurance and can cheat you.
  • The risk to the life of the policyholder: Specifically, in the Life insurance policy it may lead to an increase in crime incidents because the beneficiaries might get tempted and will use wrong ways to get the insured amount.

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