The best way to find the best insurance agency is to compare the available agencies in the sector you are looking for insurance. Technically insurance is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for the payment of a specified premium. According to Investopedia,
insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.
Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.
There are broadly eight different types of insurance available in India.
- Life Insurance
- Motor insurance
- Health insurance
- Travel insurance
- Property insurance
- Mobile insurance
- Cycle insurance
- Small-ticket insurance cover (Bite-size insurance)
Essentially knowing the different protection approaches(insurance policies) doesn’t help. Rather, you should know how every one of these plans works.
Without satisfactory information about every one of them, you will be unable to secure your insurance policy accounts, just as the budgetary prosperity of your relatives. Peruse on to gain proficiency with all you have to think about the different protection strategies.
Insurance Policy Components
Let us understand how insurance works.
This will enable us to choose the policy that best suits our needs. There are three main components (premium, policy limit, and deductible) in almost every insurance policy which are crucial.
A policy’s premium is its price, in simple terms, you can call it monthly cost. The premium is determined by the insurance agency based on the risk profile of the insured person or entity, which may include creditworthiness.
For example, if you own several expensive cars and have a history of rash driving, you will likely pay more for an auto policy than someone with a single average car and a perfect driving record. However, different insurers may charge different premiums for similar policies. So finding the price that is right for you requires some homework. Since many websites like policybazaar.com are good at comparing different plans, it is always a good idea to check there.
The policy limit is the maximum amount insurance agency will pay under a policy for a covered loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum.
The deductible is the amount the policy-holder must pay out-of-pocket before the insurer pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims.
Things to Consider
It is always wise to check whether low deductible policies with higher premium are worth the money. In cases like health insurance, people who have chronic health issues or need regular medical attention should look for policies with lower deductibles, even though they might be paying higher premiums because in the long run each time they would claim the medical expenses, low deductible will compensate the high premium. This, in the long run, will save money.