How to Explain Insurance Simply to Your Customers

Buying insurance sounds simple. But for many people, it’s confusing. Big words, thick documents, and too many options—these things often make people feel lost. They want to protect their health, car, or family, but they don’t always understand how to do it.

If you’re an insurance agent helping others choose a plan, the first step is explaining what insurance is in simple words. Your customers don’t want expert terms. They just want to know what they’re paying for—and how it helps them. Let’s look at how you can do that.

Key highlights

• Insurance means paying a small amount now to avoid big costs later.

• It protects against risks like illness, accidents, or loss.

• Anyone can buy health, car, life, or other types of insurance.

• Customers should understand terms like premium and coverage.

• A good agent explains simply, honestly, and clearly.

What is insurance?

Insurance is a way to protect yourself from big money losses. You pay a fixed amount regularly, called a premium. If something bad happens—like a medical emergency or car accident—the insurance company helps pay the cost, as per your policy.

Here’s how it works:

• You choose a plan based on your needs.

• You pay the premium (monthly, quarterly, or yearly).

• If something happens, you inform the insurer.

• The insurer checks if the event is covered in your plan.

• If yes, the company pays the amount to you or the service provider.

Why insurance feels confusing to most people

For new customers, insurance can feel like a test. There are many forms. Many words they’ve never heard before. Here’s why people hesitate:

• They don’t understand terms like "deductible" or "co-payment."

• They worry the company won’t pay when they need it.

• They don’t know how to choose the right plan.

• They fear buying the wrong policy or paying too much.

• They think, “I’m young and healthy, why do I need this now?”

This is where you come in. As someone who understands the system, your job is to break it down clearly.

Explain with everyday examples

Before getting into policy types or technical terms, share one or two small examples. For instance:

Example 1: Bike insurance
Ravi buys a two-wheeler and pays Rs. 3,000 yearly for insurance. Six months later, his bike gets stolen. He files a claim. The company gives him Rs. 65,000, as per the policy’s insured value.
That’s insurance doing its job, protecting Ravi from a sudden financial hit.

Example 2: Health insurance
Asha has a health plan for Rs. 5 lakh. One day, she needs surgery costing Rs. 3 lakh. Her insurance pays the hospital directly through a cashless claim. She may pay a small part (if required), and the rest is handled.

That’s the peace of mind customers are looking for.

Explain insurance terms in simple words

Your customer may not know financial terms. Avoid using jargon. Here’s how to explain common words in easy language:

Before showing a policy, go over these words. It builds trust and avoids confusion later.

Types of insurance everyone should know about

Not all insurance is the same. Some protect your health. Others protect your car or family’s future. Help your customer understand these 5 basic types:

1. Health insurance

• Covers hospital and treatment costs.

• Some plans include check-ups, maternity, or critical illness coverage.

• Important for everyone—young or old.

2. Car and bike insurance

• Required by law for all vehicles in India under the Motor Vehicles Act, 1988.

• Covers damage, theft, or third-party accidents.

• Can be bought as third-party only or comprehensive coverage.

3. Life insurance

• Gives money to the family if the insured person passes away.

• Some plans return premiums or savings if no claim is made.

• Useful for people with dependents.

4. Term life insurance

• Cheapest form of life insurance.

• Pays only if the insured passes away during the policy term; no return otherwise.

• Good for people who want high cover at a low premium.

5. Personal accident insurance

• Covers death, disability, or injuries due to an accident.

• Often missed but very useful.

You don’t need to explain all the policies. Ask your customer what matters to them and explain only those that fit.

Also Check: POSP Insurance Agent

Overcoming common doubts about insurance

People often have questions or fears before buying insurance. Address these with honesty. Keep answers short and clear.

“It’s too expensive.”
→ Show how a small premium can save big money later. Health plans can start at Rs. 5,000–10,000 per year for basic coverage.

“I don’t need it. I’m healthy.”
→ Remind them accidents and illnesses don’t come with a warning.

“Insurance companies don’t pay.”
→ Tell them to choose IRDAI-registered insurers with good claim settlement ratios. Read the policy document before buying.

“I can save instead.”
→ Point out that a Rs. 5 lakh hospital bill cannot be covered by saving Rs. 5,000 every year.

Tips for agents to explain better

As an agent, your role is not just to sell. It is to guide. Use these tips while talking to customers:

• Use local language if needed. Explain with simple words.

• Don’t rush into plan details. Ask about their life and needs first.

• Always be transparent—share both pros and cons.

• Avoid pushing a single plan. Compare 2–3 options.

• Show them how InsuranceDekho helps compare plans in one place.

• Keep documents ready. Explain how cashless claims work.

When people feel understood and respected, they are more likely to trust your advice.

Insurance is not just paperwork. It’s a way to stay ready for what life may bring. It helps protect your money, health, and family. The best way to explain it to your customer is to listen to their needs and speak in words they understand. Help them choose the right plan, not the most expensive one.

If you’re unsure which plan to pick or how to explain it clearly, you can compare policies and get help in your language on InsuranceDekho.