What is insurance?

An insurance policy is a contract between the insurer and the insured, in which the insured pays a premium in exchange for coverage and benefits. Insurance helps you and your family manage risks. It lets you protect your savings during emergencies. Insurance policies provide coverage against unexpected financial losses.

Why is insurance important?

Insurance is an essential aspect of modern life, providing financial protection against unforeseen risks and events. Whether it is for individuals or businesses, insurance can help mitigate the impact of financial loss brought about by accidents, illness, theft, or natural calamities. By providing stability and security, insurance plays a crucial role in financial future planning.

What are the benefits of insurance

Here are some major advantages of having insurance:

• Financial security: Insurance safeguards you and your family from unexpected events that could otherwise lead to heavy out-of-pocket costs.
• Risk management: It helps ease the financial strain caused by unforeseen expenses.
• Healthcare support: Health insurance covers medical costs, including preventive services and necessary treatments.
• Access to legal aid: Certain insurance types, like legal or liability insurance, provide access to legal advice, representation, and related services.
• Tax advantages: Depending on the policy, you might be able to deduct insurance premiums, potentially lowering your taxable income and saving on taxes.

Types of insurance policies

Below are different types of insurance policies that you can avail of as per your requirement.

• Life Insurance:
  Life insurance provides financial support to your loved ones in case of your untimely demise. It ensures they can maintain their lifestyle, manage debts, and meet future goals like education or marriage expenses. Many policies also offer savings or investment benefits, helping you build a secure financial foundation over time.
• Health Insurance:
  Health insurance covers the cost of medical expenses, including hospitalization, treatments, surgeries, and preventive care. It helps protect your savings from unexpected healthcare costs and ensures timely access to quality medical services. Many plans also offer wellness benefits, cashless treatments, and coverage for critical illnesses, giving you complete peace of mind.
• Home Insurance:
  Home insurance protects your property and belongings against damages from events like fire, theft, natural disasters, and vandalism. It covers repair and replacement costs, providing financial security for one of your biggest investments. Some plans also include liability protection if someone is injured on your property, ensuring broader coverage.
• Motor Insurance:
  Motor insurance covers damages to your vehicle and third-party liabilities arising from accidents, theft, or natural calamities. It ensures financial protection against costly repairs and legal issues. Depending on the policy, it may also cover personal accident benefits for the driver and passengers, making every journey safer and worry-free.
• Travel Insurance:
  Travel insurance safeguards you against unforeseen events while traveling, such as medical emergencies, trip cancellations, lost luggage, or flight delays. It offers coverage and assistance across borders, ensuring you enjoy your journey with peace of mind. Whether traveling domestically or internationally, it’s a must-have for a stress-free experience

These insurance policies are further categorised in different types, such as:

• Comprehensive insurance
• Third-party insurance (applicable in car insurance)
• Top-up insurance policies
• Add-on covers/rider plans

Insurance terms you need to know

• Insurer:
  The insurance company that provides coverage and pays out claims as per the policy agreement.
• Policyholder:
  The person who owns the insurance policy and is responsible for paying the premium.
• Policy limit:
  The maximum amount an insurer will pay for a covered claim during the policy period.
• Premium:
  The amount you pay periodically (monthly, quarterly, or yearly) to keep your insurance policy active.
• Deductible:
  The amount you must pay out-of-pocket before your insurance coverage starts paying for claims.
• Coinsurance:
  A percentage of the claim amount that you must share with the insurer after the deductible is met.
• Copay:
  A fixed amount you pay for specific services, like a doctor's visit or prescription, while the insurer covers the rest.
• Claim:
  A formal request made to the insurance company asking for payment based on the terms of your policy.

How does insurance work?

In simple terms, when you pay a premium—typically on a monthly basis—to your insurance company, you're essentially securing financial help for a range of covered situations. These may include accidents, routine check-ups, or other specific services depending on your policy. Once your plan is active, you're covered until you stop making payments or the policy expires. Whether it's a doctor’s appointment, home or car damage, or even a dental cleaning, your insurer will help cover eligible costs—either by reimbursing you or directly paying the provider. However, in some cases, you'll need to meet your deductible before the insurance company starts paying.

Filing a claim

In certain situations, you’ll need to file a claim to get a payout from your insurance company. This means submitting a formal request for compensation when a covered event occurs. Details on how to file a claim are usually outlined in your policy documents. Sometimes, service providers like doctors, dentists, or therapists may handle the claim process directly with your insurer.

Reasons to buy an insurance policy

Here’s why having an insurance policy is important.

Financial security: Insurance policies keep you financially equipped for any emergencies. These policies act as a financial backup for you and your loved ones in times of crisis. It can help mitigate the impact of accidents, illnesses, or other unexpected events that can cause financial strain.

Peace of mind: Knowing that you have a good financial backup for any uncertainties will help you stay worry-free.

Long-term wealth creation: Purchasing insurance can be a wise financial decision, as it allows you to leverage the power of compounding and deferred payments to create long-term wealth.

Things to consider when buying insurance online

Here are the factors that you must consider when buying insurance online.

Evaluate your needs: First and foremost, make a checklist. Understand what kind of policy that you require. For example, if you need a health insurance, then evaluate whether you need it for self or family. If you are considering buying a health insurance for senior citizens, you may want to look for specific policies designed for the age group.

Compare premiums and coverages online: Secondly, go on different insurance providers websites to check for the policies they offer. You can also visit websites like Bajaj Finance Insurance Mall, where you get all the plans at one platform. This makes it easier to compare and research on different policies, their coverage, and premium. It also helps you get the best deal and coverage. Choose the one that suits your requirement and budget.

Understand policy terms and conditions: While you are researching on different policies, ensure to read the policy terms and conditions. It will give you a better view on the coverages offered, exclusions, waiting period (if applicable), claim process, and more. It is vital to read and understand the policy terms and conditions.

How to choose an insurance plan

When selecting an insurance plan, start by evaluating your personal needs and situation. Think about the types of coverage you require and the amount of protection that fits your lifestyle. Key factors to consider include your health, the value of your property, your dependents, and your budget.
Next, research and compare different insurance providers, paying close attention to their plan features, pricing, coverage limits, and any extra benefits they offer.

If you need additional help, consider consulting an insurance agent or professional who can guide you through your choices. If you're getting coverage through your employer, your HR department can also assist you.

How to get insurance

The process of getting insurance can vary depending on the type of coverage and the enrollment period. Here are some general steps to guide you:

• Open enrollment:
  During the designated open enrollment window, you can sign up for insurance through your employer or a government program. Employer-sponsored plans usually have a set enrollment period each year, though specific dates may vary by company, state, or situation.
• Special enrollment period (SEP):
  If you experience a qualifying life event (QLE)—such as marriage, divorce, the birth or adoption of a child, relocation, or job loss—you may be eligible to enroll outside of the regular period. Typically, you’ll have a limited window (about 30–60 days) to adjust your insurance coverage after a QLE.
• Year-round enrollment:
  Certain insurance types, like auto, homeowners, and life insurance, are available year-round. You can apply directly through the insurance provider whenever you’re ready, based on their plan guidelines and requirements.