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What is insurance?

‘Insurance’ is the form of risk management which involves the risk of loss from one entity to another entity. Risk management is the process of controlling the risk. The person who buys the insurance policy is said to be insured, and the company which provides insurance is known as insurer.

The company which sells the insurance policy gives a certain guarantee to the insurer to compensate in case of some financial or personal loss. In the meantime, a certain amount is charged from the person to get insured. This process is done on some contract basis with some terms and conditions.

Someone can take several types of policies like health insurance, agricultural insurance, vehicle insurance, life insurance, home insurance, income protection insurance, builder’s risk insurance, credit insurance and many more.

Let’s discuss some of them :

1.Life insurance

Life insurance includes some of the risks like illness, income during retirement, premature death. Coverage period of life insurance is approximately more than a year. Therefore, it requires periodic premium payments, which can be either monthly, quarterly or annually.

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2.General insurance

General insurance includes some of the risks like property loss, liability from the damage caused to you from some third party, accidental death or some injury.

3.Flood insurance

Flood insurance basically protects against the loss of the property due to flooding.

4.Landlord insurance

Landlord insurance covers all the commercial properties which are rented to others.

5.Home insurance

Home insurance is also known as hazard insurance. It covers the destruction or the damage caused to the insured. This policy excludes certain risks like damage caused due to flood or earthquake. This requires additional coverage.

6.Vehicle insurance

Vehicle insurance covers all the risk areas which arises from the loss of the vehicle or from accident caused to the vehicle. Here, insured has to submit a copy of FIR to the insurer along with some documents related to it, in order to claim for the compensation.

7.Marine insurance

Marine insurance is also known as marine cargo insurance. It includes damage to the vessels, and cargo at sea or transit, regardless of how the transit is done. This also insures from the loss due to fire, shipwreck etc..

8.Natural disaster insurance

Natural disaster insurance covers all the risk caused due to the natural disaster. Here, insurer has to pay periodic payments to the insured until his/her home is rebuilt.

9.Terrorism insurance

Terrorism insurance incurs the protection against the damage or loss caused by some terrorist activity.

10.Volcano insurance

Volcano insurance includes the risk caused due to the volcanic eruption.

11.Windstorm insurance

Windstorm insurance incurs all the damage that is caused due to the wind events like hurricanes.

12.Credit insurance

Credit insurance risks against disability, death or unemployment. Here, the insurer has to pay some amount or all of the loan when the above mentioned circumstances arises. Credit insurance includes mortgage insurance and trade credit insurance.

So, these are some of the major insurances. What type of insurance would you take?

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