Insurance is a product that you have been familiar with for ages. You have seen your parents take it. Your siblings, nephews, uncles, aunts have been talking about it incessantly at weddings and other social functions. Yet, do you understand the reason why such a product exists in our market?
Contrary to popular beliefs, not all insurance products are scams or frauds. These products are there in the market for a reason – the reason to hedge losses against circumstances. These products are there to help decrease the blow to one’s finances if circumstances change for the worse.
It can be an accident, or a natural disaster, or civil unrest, or disease, or plain old bad luck. Anything can lead to misfortunes and damage to your health or your property. That is where insurance comes in.
Insurance providers supply insurance schemes and products that act as a safety net to catch you when you have a bad fall in life. Even though now you might be healthy, employed, and own a car and house, you have no certainty that this will continue in the future. Things can change, for the better or for worse. And when it changes for the worse, insurance schemes are there to cushion the fall.
The idea of insurance schemes is you are obligated to pay a small fee regularly at fixed time intervals to the insurance providers. These providers then “gap cover” you in this scheme commonly called policy. “Cover” essentially means that depending on the type of product you choose, that product will be applicable as long as you pay up the regular amount and in some cases until your death.
There are tons of policies available. Some of them are health insurance, car insurance, home insurance, life insurance, etc. There are more specific products that cater to high net worth individuals that insure their investments and or corporations. Today, the discussion will be mainly on retail insurance products like health insurance, home insurance, life insurance, and vehicle insurance.
Health insurance – These products help cover your unexpected medical bills and hospitalization costs. Usually, you will have to pay a certain percentage of the bill but the reminder of the bill will be covered by the insurance company for you.
Home insurance/Vehicle insurance – These products cover any damages or liabilities incurred on your home or vehicle depending on the scheme you opted for. Some vehicle insurances cover damages including payouts in case of accidents, repair costs of own and other vehicles, and even pay for medical bills resulting from the accident. Similarly, home insurance covers your home and products from natural disasters, thefts, and fires.
Life insurance – This product mainly assures that in case you die, or something unforeseeable happens to you, that renders you incapable of providing for your family or dependents, this product will pay up a certain amount on your behalf to help your dependents and family.
Insurance products are a necessity because it helps lower the risk. Everywhere there is a risk, a chance of ill happening to you, your products, your assets, or your life. Buying insurance schemes help cover for any off chance that such an incident occurs.