Insurance is a contract which is presented as a policy to be used as a risk management tool to ensure financial protection at the time of crisis. Insurance helps an individual to ensure financial protection against losses that may arise during an unforeseen event. An insurance policy is a contract between an individual (policyholder) and an insurance company (Insurance provider), under which, the individual makes regular payments known as premiums to the insurance company which in return pays the sum assured in case an unforeseen event such as demise of the policyholder, accident, damage to the vehicles or other possessions.

Unfortunate events like accidents, illnesses, and natural disasters come without any warning and thus it is necessary for you to keep yourself and your loved ones shielded against such unforeseen happenings. One of the best and simplest ways of keeping yourself secured against these contingent events which may cause a financial loss is buying an insurance policy.

As mentioned earlier, insurance is a legal contract between the policyholder and the insurance provider. The insurance policy carries all the details about the aspects and conditions under which the insurance provider will pay out the insurance amount to the policyholder or their nominee in case an unforeseen event occurs. Insurance is a financial tool which helps in ensuring financial protection of yourself and your family. Generally the person who has purchased the policy also known as policyholder has to pay premiums for the coverage available under the insurance policy. Any person can seek insurance from an insurance company.

There are several types of insurance available in India. The four most common types of insurance bought in India are as mentioned below :

1. Motor Insurance :Motor insurance policy is a type of insurance policy that provides financial assistance in the event of an accident or mishap involving your vehicle. Motor insurance can be purchased for three categories of vehicles which are personally owned four wheeler, personally owned two wheeler (bikes and scooters) and commercial vehicles. There are three types of motor insurance available in India which are Third party Liability Cover, Comprehensive Cover and Stand Alone Own-Damage cover. According to a person’s coverage requirement for their vehicle, they can choose a motor insurance that fulfills their requirements. Third party motor insurance policy is mandatory in India for all vehicles, as per the Motor Vehicles Act.
2. Health Insurance :Health insurance policies provide financial assistance to the policyholder in case they need to be admitted to the hospital for any kind of treatment. Additionally, some health insurance plans also cover the cost of treatment which are undertaken at home before the hospitalization or after discharge. There are several health insurance plans available in India such as Individual Health Insurance, Family Floater Plans, Critical Illness Cover, Senior Citizen Health Insurance, Group Health Insurance, Maternity Health Insurance and Personal Accident Insurance.
3. Life Insurance :Life insurance is an agreement between an individual and an insurance company under which the insurance company promises to provide a sum assured (death benefit) to the family of the life assured in the event of an unforeseen death of the life assured. In case of no death, a sum assured known as the maturity benefit is provided to the life assured at the time of maturity of the policy under selective life insurance plans. There are 6 types of life insurance policies available in India which are Term Life Insurance, Unit-Linked Insurance Plan (ULIPs), Child Protection Plan, Money Back Plans, Retirement Plans and Endowment Plans

Apart from providing coverage from the unforeseen financial losses, insurance policies also lets a person avail income tax benefits. Below mentioned are some tax benefits that one can avail by purchasing an insurance policy under the Income Tax Act :

• Section 80C :Under Section 80C of the Income Tax Act, premiums paid to purchase life insurance policy qualify for tax exemptions for upto Rs. 1.5 Lakh.
• Section 80D :Under Section 80D of the Income Tax Act, premiums paid towards health insurance policy qualifies for tax exemptions.
• Section 10(10D) :Benefits under life insurance policy that shall be receivable by the life insured or the nominee also qualify for tax exemptions under Section 10(10D) of the Income Tax Act.

The premium paid for health insurance plans qualify for a tax deduction of up to Rs. 25,000 under Section 80D of the Income Tax Act. These plans also qualify for an additional Rs. 25,000 tax deduction for premium paid for parents’ mediclaim policy (Rs. 50,000 if parents are senior citizens).

Below mentioned are some components to help you understand what is insurance and how does it work :

1. Premium Amount :Premium of an insurance policy is the decided amount that you need to pay for the insurance coverage. It is typically known as regular payments which can be made monthly, quarterly, half-yearly or annually. There are various factors on which the premium of an insurance policy is calculated by the insurance provider. The idea behind that is to check whether the insured person is eligible for the type of insurance policy they want to purchase.
2. Policy Limit :Policy limit is defined as the maximum amount that an insurance provider will pay for the losses covered under the insurance policy. This is determined on the basis of policy tenure, loss and similar other factors.
3. Deductibles :Deductibles under an insurance policy refers to the amount that the policyholder has to pay before the insurance provider settles the claim. Deductibles shall be applicable as per the policy’s terms and conditions.

Factors that determine the premium of Life Insurance Plans include the policyholder’s age, sum assured, gender, lifestyle, job, medical history, type of policy, tenure of the policy and riders (if any).

Different life insurance plans have different features and advantages. Thus, the definition of the best plan varies from individual to individual. The best life insurance plan is the one which best meets your requirements and budget. However, among all the different types of life insurance plans, the most preferred type of life insurance plan is Term Insurance Plan because it provides high coverage at nominal premium.

Before purchasing a life insurance plan you must check your insurance objectives, your income, your life insurance existing policies (if any), your assets, liabilities, and your expenses.

Yes, if an individual declares that he/she consumes tobacco/alcohol then the premium for a life insurance plan increases because of high-risk involved.

You can return the policy stating the reasons why you disagree with terms and conditions of the policy within the free-look period as per regulations of IRDAI. For Life Insurance policies, the free-look period is of generally 15 days (30 days for online policies) from the date of receiving policy documents.

Yes, you can purchase a new life insurance policy despite already having one. It helps a policyholder get an increased life coverage along with all other benefits of a life insurance plan.

Life insurance policy can help an individual to ensure financial security of their family. In case of your unforeseen demise during the policy tenure, the financial burden of fulfilling financial requirements will on to to your family members who were fully dependent on your income, under such circumstances a life insurance policy will provide a death benefit to your family members which will allow them to fulfil their financial requirements in your absence.

Before you choose a sum assured for your life insurance policy, it is important that you consider a sum assured which is 10 - 15 times your annual income and enough to help your family to maintain a decent lifestyle in your absence. Consider a few factors such as age, current expenses, liabilities, future expenses and number of financial dependents before choosing a sum assured. 

Health insurance policy is an agreement whereby an insurance company agrees to undertake a guarantee to compensate the insured for medical expenses in case of a medical emergency. A health insurance policy protects the insured for several surgical expenses, critical illnesses, and daycare expenses, for a policy term, for up to the sum insured limit. 

Yes. You can be covered under more than one health insurance plan. In this case, the claims are settled as per the contribution clause, when the claim is higher than the sum insured for one health insurance policy. 

A health insurance policy not only protects the insured financially for future, but also offers relief in the present. Lifestyle habits such as drinking, smoking, or sedentary lifestyle invite health  issues, which can be minor or serious, may be expensive to treat. To stay financially protected in such times, you need a reliable health insurance plan that covers you at all times. Apart from this, buying a health insurance policy also reduces your overall tax liability by allowing you tax deductions on the premium paid, under Section 80D of the Income Tax Act, 1961.

Different health insurance plans have different premiums. The insurance companies determine premiums after considering various factors that are explained below: 

1. Type of Insurance Plan : Your health insurance premium is based on the type of plan you choose. If you choose a critical illness insurance plan, then the premium will be high. If you choose an individual health insurance policy, then the premium will be different from that of a family floater plan. To know the difference in health insurance premiums, you can use InsuranceDekho’s health insurance premium calculator.
2. Age of the Insured : With age, you become more prone to health issues and are more likely to make health insurance claims. Therefore, you are required to pay higher premiums if you buy health insurance plans in later stages of life. This is why it is recommended to buy health insurance policy when young. 
3. Policy Term : Most health insurance plans come for a period of 1 year, 2 years, or 3 years. Greater the policy term you choose, the greater will be your coverage, and hence higher will be your health insurance premium, and vice versa. 
4. Lifestyle Habits : If you drink alcohol or smoke regularly, then you may be denied health insurance completely. However, there are some insurance companies that cover you for the same, for which they charge high premiums. This is because, with these lifestyle habits, you are more prone to health issues.
5. Family Medical History : Before deciding your health insurance premium, the insurance company will ask about your family medical history. This is because if someone in your family has a certain disease that you are also vulnerable to, then the insurance company will charge you a higher premium due to increased risk.  
6. Sum Insured : Health insurance plans come with different sum insured options that you can choose from as per your budget and requirement. The higher the sum insured, the higher the medical coverage and hence higher the health insurance premium. But it is not recommended to compromise on the sum insured to save on premiums. This is because it will not cover you adequately in the time of need.   

Yes. Most health insurance plans cover you for medical treatments that do not require hospitalisation of at least 24 hours. These are known as daycare procedures. Daycare treatments are performed under local or general anaesthesia in a clinic, hospital, or daycare center. Some daycare treatments that health insurance plans cover you for are chemotherapy, eye surgery, sinusitis, dialysis, angiography, etc.  

According to the health regulations issued by the Insurance Regulatory and Development Authority of India (IRDAI) in 2019, all insurance companies are required to insure robotic treatments. Therefore, all insurance companies provide it with some sub-limits and policy conditions.

A cumulative bonus in health insurance refers to the financial benefit which you receive as a reward for not making any health insurance claims in a policy year.

1. Healthcare Inflation –Inflation in healthcare is soaring at a rate of 12% to 18% which comprise the costs of medicines, hospital admission costs, medical advancements, etc. It leads your insurance companies to increase your sum insured every year which increase your premium too during policy renewal.
2. Age of Policyholder –Increase in age can also impact your health insurance premium while renewing the health insurance policy, especially for those touching 60 just before renewal.
3. Change in Coverage – If you change your health insurance policy coverage during the renewal process either by adding some add-on covers to your plan or by changing your insurer altogether, it may increase your premium.

If you could not make the payment for the health insurance premium on time, then your policy can be cancelled. After paying the first premium, you will be given a grace period if you do not make the payment for the premium on time. You can renew your health insurance plan by paying the premium within 15 to 30 days of the grace period, which can vary from insurer to insurer, but, if you miss this opportunity too, then it could risk you losing your coverage.

After a health insurance claim is filed and settled by the insurance company, then the policy coverage tends to be reduced by an amount that has already been released during the settlement. For Instance, if your buy a plan with Rs. 5 lakh policy coverage and make a claim of Rs. 2 lakh, then you can avail of the health insurance of Rs. 3 lakh in the remaining policy year.