Insurance can be defined as an agreement between the insurance company and the policyholder. Under this type of agreement, the insurer provides financial coverage to the policyholder in exchange of the premium paid. An insurance policy insurers the policyholder against financial risk in case of unpredictable contingencies, subject to the terms and conditions mentioned in the policy. The premium of an insurance policy is based on various factors such as income, age, number of family members insured, etc.
Given below are the types of insurance coverage
Before buying insurance, it is imperative to understand how an insurance policy works. Given below are a few important terms you need to be aware of
This is the amount of money you pay to the insurance company in exchange for the policy benefits that you get.
This is the coverage amount applicable under non life policies such as motor and health.
This is the amount of money that the nominee is eligible to receive in case of death of the life assured.
On paying the premium,the policy is generated which is sent to the customer via email and also delivered to his physical address. The policy lists down all the important terms and conditions based on which the insurance company is liable to pay the insured amount to the nominee or the policyholder.
On buying insurance, you need to pay premiums in exchange of which the insurance company offers you coverage. The premium has to be paid for a specific period of time based on the policy terms and conditions.
In the event of policy maturity, hospitalization or damages in case of health or any uncertain event caused due to motor damages, a claim has to be filed on the basis that the insurance company will compensate you.
Given below are a few features of an insurance policy:
The tax benefits offered by an insurance policy depend on the type of plan you purchase. Life insurance policies offer you exemption up to Rs. 1.5 lakh under section 80C of the Income Tax Act, whereas, health insurance offers you tax benefit up to Rs. 1 lakh under section 80D of the ITC.
This article is issued in the general public interest and meant for general information purposes only.
Readers are advised to research further in this regard.
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