Questions Personal and Family

What is insurance policy and how it works?

Airtract

Sadhika Ravish

Conquer from within

You may have heard about the term insurance policy and some terms related to such policies. Nowadays, there are hardly any product or thing with which insurance is not attached. Even human life is under the insurance policy. To describe everything about it, let’s first discuss what is precisely meant by the insurance policy. 

People struggle a lot to earn for their living and buying comforts. Thus, you wouldn’t want to go through such situations where you have to face financial loss. But what about accidents, thefts, sudden deaths, health failures, etc.? Life is not static, and you may encounter any unwanted situation suddenly. Insurance is such a way which provides you certain protections so that you can get rid of financial losses during the time of your distress. There are specific risk management procedures and documentation which keeps all your details updated so that whenever you face any such sudden unwanted situations, you may claim your financial assistance from the respective insurance company. These are called insurance policies. Insurance policies protect you from insecurities, economic or property loss, bankruptcy, etc. Insurance policies can be granted by any of the entities like an insurance company or an underwriter or an insurer or an insurance carrier. You need to chose which kind of insurance you want to take and follow the procedures according to fix a policy.

There are two situations where insurance policies work. One is the Liability which protects you during any accidents or damage to a property; the other is the Personal Injury Protection which provides you with full coverage during any medical expenses related to driver and passenger injuries.

Insurance policies work in any of the following plans:

  • The plan insurance policy is a process where you can get the full financial cover during the time of your risk but cannot earn any savings till you don’t face a threat. You need to invest a certain amount of premium amount at a particular duration period which you cannot earn back as savings, but when you face a sudden situation, you can get a vast amount of coverage money immediately. 
  • ULIP (Unit linked insurance plan) is a type of insurance policy where you can have both the insurance as well the investment facility. Here you need to pay a certain amount of premium at a particular duration of time, and it can act as an investment amount even if you don’t face any risk or unwanted situation.
  • Endowment Plan is such policy which provides you with both Insurance and Savings. Here you may get the full sum even if the insured person dies during the policy term.
  • Money Back Policy means a cover which provides your sum amount periodically along with the insurance amount.
  • Whole Life Insurance is a life coverage plan which is assured to you for the entire life.

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