What is Insurance ?

"Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event."

Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the Insurance Companies act as trustees to the amount collected. 

For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured person receives a fixed compensation on the death of the insured.

Similarly, in a car insurance, in the event of the car meeting with an accident, the insured receives the compensation to the extent of damage.

It is a system by which the losses suffered by a few are spread over many, exposed to similar risks.


Why should you take Insurance ?

Insurance is desired to safeguard oneself and one's family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events.

By taking life insurance a person can have peace of mind and need not worry about the financial consequences in case of any untimely death.

Certain Insurance contracts are also made compulsory by legislation. For example, Motor Vehicles Act 1988, stipulates that a person driving a vehicle in a public place should hold a valid insurance policy covering " Act" risks. Another example of compulsory insurance pertains to the Environmental Protection Act, wherein a person using or carrying hazardous substances (as defined in the Act) must hold a valid public liability (Act) policy.


How to get Insurance ?

The simplest procedure to obtain insurance is:

• Approach the Insurance Companies directly.
  
• Through Insurance agents of the concerned companies.
  
• Intermediaries.