What is Insurance?
Insurance is a legal agreement between two parties i.e. the insurance company and the individual. In this, the insurance company promises to make good the losses of the insured in case of an unfortunate event or loss. It can be the death of the policyholder or damage/destruction of the property. The insured pays a premium in return for the promise made by the insurer.
Buying insurance is important as it ensures that you are financially secure to face any type of problem in life, and this is why insurance is a very important part of financial planning.
How does insurance work?
The insurer and the insured get a legal contract for the insurance. The insurance policy has details about the conditions and circumstances under which the insurance company will pay out the insurance amount to either the insured person or the nominees. Insurance is a way of protecting yourself and your family from a financial loss. Generally, the premium for a big insurance cover is much lesser in terms of money paid.
The insurance company takes this risk of providing a high cover for a small premium because very few insured people actually end up claiming the insurance. This is why you get insurance for a big amount at a low price.
tax benefits on insurance
Apart from the safety and security benefits of buying insurance, there are also the income tax benefits that you can avail.
Life insurance premium of up to ₹1.5 lakh can be claimed as a tax-saving deduction under Section 80C.
Medical insurance premium of up to ₹25,000 for yourself and your family and ₹25,000 for your parents can be claimed as a tax-saving deduction under Section 80D.
These claims have to be made at the time of e-filing income tax returns.
types of insurance
Life insurance
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ContactEnsure your life before you ensure anything else!
Be it life insurance, health insurance or general insurance, you can buy an insurance policy offline as well as online. Ensure that you have done your research before choosing and purchasing an insurance policy.
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