My dad finished constructing our dream home in 2010, a few months after I got married.  Every one of us, my dad, I and my brother were contributing towards the EMI payment and this led my dad to borrow a little more and everything looked fine.

Two years later, my mom fell ill.  She contracted Hepatitis and it later spread to her brain causing hepatic encephalopathy (build-up of liver toxins in the brain).

She was hospitalized for three months and I had to take off from work and be by her side.  Imagine spending 4k every day for medicines and others.  As if that was not enough, I then had to go to a blood bank looking for platelets and other blood products.

It sure drained me out, both physically and emotionally!!!

But my dad was reassured that I being beside my mother in the hospital, he could take care of himself and the household.

All our savings were lost and ultimately we couldn’t save her.  My parents never took Health Insurance.

I just can’t figure it out why I did not persuade my parents to take health insurance or get them insurance myself.  Perhaps, I thought it wasn’t necessary.

Twenty days since my mom passed away, we got another big blow.  My dad was so bereaved after the death of my mom that he fell sick in her memory and passed away.  He too had no health insurance.

It never crossed our minds that we needed insurance for the loan we had taken to construct our home.

With all our savings vanished into thin air spending on hospital bills, it dawned on me that the debt incurred via home loan was inherited by me and my brother.

Now, just imagine what good insurance would have done for both my parents’ hospitalization and our home loan???  If I did miss out on the term insurance, oh no what a disaster had struck us!!!

I give you this example to reinforce the importance of having insurance.  I personally have been through all these and hence would like you to have insurance, namely Term Insurance, Health Insurance and Home Loan Insurance.

No one can predict when a disaster strikes in one’s life.  As we have vaccines to help us protect from diseases in the future, in the same way, you need insurance to protect you and your family in the future.

What is insurance

Insurance is a form of risk management from financial loss in times of uncertain loss of life, property, damage to vehicles, health issues and various other forms.  A company which provides insurance is known as an insurer, carrier or underwriter.

The person or entity buying that insurance is known as the policyholder.  Insurance is the guaranteed payment by the insurer to the policyholder in the event stated above to cover losses incurred by it.

Note that not all losses can be financially compensated but it a means through which it is done mostly.

The payment is done by the terms agreed in the insurance policy.  The amount of money required by the policyholder to pay the insurer to compensate for any financial losses in the future is termed the Premium.

The financial help guaranteed by the insurer can be recovered from the insurer by way of submitting a claim.

7 Principles of Insurance

Insurance involves collecting premiums from the so-called high-risk exposure group to pay for any losses that they could incur.  The main motive of insurance is cooperation.  Insurance is defined as the transfer of risk of loss from one entity to another.  There are 7 principles governing insurance.

  • Nature of Contract.
  • Principle of utmost Good Faith.
  • Principle of insurable interest.
  • Principle of indemnity.
  • Principle of subrogation.
  • Double insurance.
  • Principle of proximate cause.

Types of insurances:

Any risk that can be quantified in terms of financial loss can be insured.  An insurance policy will contain in detail which risks are covered by the policy and which are not.  Below is a list of the different types of insurance which is inclusive.  An insurance policy may stand alone or be included with another risk category say for example an auto/motor insurance may also cover the accidental death benefits to the driver and passengers with add-ons or included in the main policy.

Auto insurance:

Auto insurance protects the policyholder against financial loss incurred such as in a traffic collision.

Coverage includes property coverage, for damage to or theft of the car.  Liability coverage for the property damaged.  Medical coverage, covering the cost of treating injuries, rehabilitation and sometimes lost wages, etc.

Health insurance:

Health insurance policies cover the cost of medical treatments and hospital stay.  In most developed countries, all citizens receive health coverage from their governments.  This type of insurance is part of an employer’s benefits.

Income protection insurance:

This policy provides financial support in the event of the policyholder becoming unable to work because of illness, disability or injury.

This includes disability insurance, long-term disability insurance, disability overhead insurance, total permanent disability insurance, and worker’s compensation.

Life insurance:

This type of insurance provides a financial benefit to the family or other beneficiaries.  These policies have the option of paying to the beneficiary either in lump sum cash or an annuity.

A life insurance policy cannot be purchase on another person without his/her knowledge.

Property Insurance:

Property insurance provides protection against risks to property and these include fire, theft or weather damage.  These also include damages due to natural calamities like flood, earthquake or fires. This is a very broad category and has various forms.

Liability Insurance:

Liability insurance covers legal claims against the policyholder.  Many types of insurance include liability coverage.  The protection in this insurance policy is twofold.  Liability policies cover the negligence of the policyholder.

Credit Insurance:

Credit insurance repays some or all of a loan when the borrower is unable to meet or discharge financial obligations.  Those covered are mortgage, credit card payments, trade credit and collateral protection insurance.

Why you need insurance?

You should have read my story in the beginning. I would really never wish that to happen to anyone.

Insurance is one such thing you never know when you will need it!!!

In India taking insurance policies is a huge financial decision for the family as a whole and involves a lot of planning and the right timing too.

With most of the insurances providing tax benefits this acts as a form of an incentive to encourage well-informed individuals like you to take insurance.

I am sure you already know something about insurance.  If not, the above videos would have helped you.

Many of you would have taken different types of insurance.  It is all the more important now to take insurance in the wake of the COVID-19 pandemic.

With the lockdown in force and the uncertainties of the future, it makes it even more important to have insurance i.e. health, life term, property, credit insurances etc.

I hope you take important decisions with your family members and avail insurance right away.

If you are wondering where to find different policies based on your needs, click on the button below.

You can look at different policies and compare them with different insurers and make an informed decision as to which to choose.

Find out more button

I hope you choose the right insurance for you and your family and secure both you and your family for any unforeseen calamities, incidences, accidents or health issues.

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