Insurance is a legal contract where the insurer or insurance business pays money to the insured if damage occurs in certain ways. In order to get this protection in the form of money, the insured has to pay a specific sum of money known as premium. Insurance plans are generally divided into two categories, namely life insurance and general insurance.
General Insurance
Travel insurance, health care coverage, automobile insurance and property insurance come under this category. In general insurance the sum is paid out when damage occurs in certain instances and under certain conditions. All types of damage and loss is not always covered and varies from one plan to another.
For example, health insurance can cover only one person, or an entire family, which is mainly the parents and two children, or a group of employees. Similarly automobile insurance covers cars, two wheelers, and commercial vehicles.
Life Insurance
Life insurance plans are those, which are paid out to the nominee when the insured person expires or in some cases to the insured person when the plan matures.In term life insurance one has to pay a minimal cover amount monthly or annually and if they expire, their nominee receives a significant payout. In this plan, if the person does not expire within the duration of the plan, they do not receive any payout. On the other hand, a whole life insurance has a duration till the insured turns 100 years old and then if the person is alive, it pays out a certain, previously agreed upon sum.
There are also endowment plans, which allow the insured person to save and invest as well, since they receive the entire sum of money they invested over the years. In case they expire, their family or nominee receives the amount.
Planning on getting an insurance plan, or need to consult someone regarding which cover to get for your circumstances, Arthavidhiis now offering assistance through financial experts, to make this process easy.
