What is insurance?

Insurance refers to a mutual agreement or a policy that an individual purchases from an insurance company by paying premiums on yearly, monthly or quarterly basis to the insurance company. In return, the insurance company protects the buyer or the policyholder from any kind of loss or risk that may occur in the future.

Apart from individuals, both public and private sector organization can purchase insurance to protect their employees. It's basically a kind risk management scheme by using which the insured person can get protection against possible eventualities such as loss, sickness, death, loss done to his/her belongings etc.

Insurance is the only financial instrument that helps you manage your financial risks smoothly and reduces your financial worries.

Types of Insurance in India

There are different types of issuance available in India. Listed below are the major types:

  • Life Insurance : It is kind of shared bond between an insured individual and an insurance company wherein you pay a certain amount of money as premiums on monthly, yearly or quarterly basis to an insurance company. The insurance company, in return, protects you against future eventualities such as loss or damage done to you, your family members and property. There are different life insurance plans available in India offered by both private and public life insurance companies to help you meet your different financial needs at different junctures of life. The sum assured received from life insurance plans can be used for fulfilling a variety of tasks such security after retirement, protection against health care cost. Life insurance policies not offer risk coverage, you can also borrow money against certain policies. These policies come with a lot of benefits such as death benefits, maturity benefits and tax benefits. Life insurance plans in India normally fall under two major categories namely “Whole Life Insurance Plan” and “Term Life Insurance Plan”.
  • Health Insurance : Another type of insurance available in India is Health insurance. It gives you protection you against the medical costs incurred in hospitalization due to illness or accident, nursing care, surgeries, consultation, diagnostic tests, ambulance service, hospital accommodation, medical bills etc. The only thing you have to do to avail these benefits is to purchase a health insurance policy by paying a certain amount of premium to your insurance provider periodically. The insurance provider will take the complete responsibility of protecting you against the cost involved in medical treatment. Certain health insurance policies also pay for regular medical checkups.
  • Car Insurance : The idea of purchasing a new car in India isn’t complete without the associative purchase of a good car insurance policy. As the name so aptly implies, car insurance is designed to save the owner of a vehicle from the often exuberant financial liability that is set to occur when his/her cherished vehicle meets with an unfortunate accident or is deemed lost. Accidents come in different forms- both natural and man-made, with a robust car insurance policy providing comprehensive protection against both these unforeseen instances.
  • Two Wheeler Insurance : In India, the number of two wheelers massively outnumber four wheelers. Thus, for most Indians, a robust two wheeler insurance policy that protects their bikes or scooters against natural or man-made accidents is an essential investment. Almost all insurers in India offer two wheeler insurance as a priority offering in their arsenal of products with the additional option of specific add-on covers that take into account conditions that aren’t accounted for by the main policy. From theft to major damage in an unfortunate accident, from loss of keys to mechanical on-road issues, everything is taken care of.
  • Travel Insurance : Traveling is one of humanity’s greatest passions, and a robust travel insurance policy ensures that travel adventures that have gone out of hand do not claw you back financially. Offering complete protection against such instances as loss of baggage, passport and trip cancellation to major medical issues and unforeseen risks while traveling abroad, a comprehensive travel insurance policy is an eager explorer’s best friend. And, purchasing travel insurance online is a breeze and a contributing factor to its steady popularity.
  • Home Insurance : Like they say, ‘home is where the heart is’, which equates to the fact that ensuring the safety of your cherished home ascertains the safety and happiness of you and your loved ones. Home Insurance policies are thus, an important investment. Providing you round the clock protection against financial liabilities arising from damage incurred by your house and/or its contents, a good home insurance policy is the cautious home owner’s best friend. Almost all Indian insurers’ offer this product, and the same can be easily purchased online.

Why do you need Insurance?

There are a number of reasons why you feel the need of insurance in life. Given that life is full of uncertainties, it’s really important you purchase insurance as early as possible to protect you and your family against all odds. Having an insurance plan not only keeps you protected, it also provides you with mental peace. Insurance is particularly important for senior citizens for whom these insurance policies can serve as a replacement for their income and help support themselves and their family members.

Besides, you can also use these insurance policies to fulfill your investment goals and plan for a cozy retirement. Many insurance policies also offer loan against them which is another advantage you can enjoy by purchasing insurance. Above all, insurance policies will not only take care of you, they will also take care of your near and dear ones by paying for their various needs, even if you are not there.

So, choose your insurance plan carefully, given that a huge number of insurance policies available in the market. Ask yourself the following questions before you actually purchase an insurance plan – “why do you need insurance?”, and “How much do you need?” and “Should you go for term plan or whole life plan?” Once the answers are clear in your mind, choose your insurance policy accordingly.

Why should you Buy Insurance Online?

Before getting into the details about the online insurance industry, some of the mind-boggling numbers and facts to note:

  • “India's life insurance sector is the biggest in the world with about 360 million policies which are expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per cent over the next five years. The insurance industry plans to hike penetration levels to five per cent by 2020”.
  • “The country’s insurance market is expected to quadruple in size over the next 10 years from its current size of US$ 60 billion. During this period, the life insurance market is slated to cross US$ 160 billion”.
  • “The general insurance business in India is currently at Rs 78,000 crore (US$ 11.7 billion) premium per annum industry and is growing at a healthy rate of 17 per cent.”

This is simply the perspective of the industry and its immense requirement of a faster infrastructure. What could be faster in terms of administering an industry that is so humongous that is efficient as well as cost effective, both to the professionals as well the customers, than the online space?

To be able to pull off an unbeatable large number of consumer base and transactions, the Indian insurance industry has made it very convenient for people to access all sorts of insurance products online. But the question still remains why and how is it beneficial for a civilian singularly to go and buy insurance online and not to go for a more conventional option? Read on to get a clearer perspective on the same.

Top Reasons To Buy Insurance Online

This revolutionary advantage of being able to buy insurance online is perhaps one of the best gifts on the e-commerce wave that has helped consumers. Here is why:

  1. All transactions, application processes, status updates and checks can be done online allowing you to save time and effort that is wasted otherwise if you visit a bank or meet an agent.
  2. Online insurance policies are generally quoted at lower premiums against offline ones. This is due to the fact that the insurance company saves money and time on distribution costs, infrastructure and other overheads, hence passing the savings to the policyholder.
  3. One of the main attractions of buying insurance online is that the consumer by large learn, research, share and compare all the various insurance companies that are currently in the market. There is no requirement to hurry on a purchase and instead take time to come with a highly informed decision. Individuals can simply browse various online plans, compare features and review crucial parameters to understand the performance of the plan and the insurance company.
  4. Buying online allows the consumer to enjoy a high level of flexibility as they themselves are taking control of every aspect of the insurance application, transaction or sustenance process starting from research and shortlisting of potential products to form filling to making premium payments.
  5. Most insurance company portals are intuitive and engaging. So people can choose a policy, fill up the application form online, choose supporting documents and submit (upload) them through an easy and secure user interface. This rids people of the hassles of creating document photocopies, seeking certificates or the burdensome couriering of documents.
  6. You get access to opinions about products through online reviews, opinions in forums, suggestions and consider various unbiased perspectives about plans and the insurance company you are planning to buy from.
  7. Most claims are rejected because incorrect or incomplete details submitted during form filling. Also, in several instances where the insured is not sure about the nature of the policy and the expected returns. You can download and view all the policy features and clauses with just a few clicks online.
  8. Since the customer has the freedom from depending on a particular person or agency, there is no uncertainty about your role and responsibility. Paying premiums or updating/ seeking information simply requires a few clicks or a phone call.

Demographic factors such as young insurable population, growing middle class and growing awareness of the need for protection and retirement planning will support the growth of Indian life insurance as well as expanding rise of the Internet is contributing to the industry and it is the perfect time for people to take advantage of the competitive aspects of the industry at this time.

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  • Bharatiya Krishi Bima Yojana crop insurance to cover 50% of Indian farmers

    Over the next two to three years, the Union government aims to implement the new Bharatiya Krishi Bima Yojana crop insurance scheme which will cover farmers against losses arising due to calamities such as hailstorms, and unseasonal rains.

    Presently, only 23% of the total cropped area of 194,000,000 hectares is covered under insurance, and banks are being roped in to play a crucial role in ensuring that farmers who have taken crop loans get their crops insured compulsorily. Farmers who haven’t taken crop loans can also be covered under insurance.

    Banks are notified by the Ministry of Agriculture to credit all claims that insurers receive to the farmers’ bank accounts within a maximum period of 14 days. The premiums for this new crop insurance will be up to 2.5% of the Sum Insured.

    18th February 2016

  • Insurance FDI cap raised to 49%; Up to Rs.6,000 crore expected in 2016

    The Insurance Laws amendment Bill was passed last year, raising the ceiling for foreign entities to increase their vested stake in India’s private insurance companies to a maximum of 49%. This was up from the older cap of 26%.

    AXA invested around Rs.1,300 crore in life (and non-life) insurance undertakings with Bharti Enterprises. Nippon invested around Rs.2,265 crore through acquisitions of a massive 23% stake in the Reliance Life Insurance Company. Bupa invested around Rs.191 crore in Max Bupa Life Insurance – raising its overall stake to the current maximum of 49%.

    Other players are expected to follow suit, and give the insurance sector in India a huge boost though foreign investments.

    4th January 2016

  • General Insurance has fallen by 0.70% in the financial year 2014-15

    As per data received by the General Insurance Council, despite the increase in per capita income, General Insurance has fallen in the last 2 fiscal years, 0.70% in the year 2014-15 and 0.80% in the previous year. Slow economic growth is the reason behind the decline say industry analysts. The per capita premium however for general insurance rose slightly from the previous fiscal year of Rs. 664 to Rs. 686 this year. Even with the launch of the government programmes such as the Pradhan Mantri Suraksha Bima Yojana earlier this year, the number of people who have taken insurance increased, but the premium collections has remained slow.

    22nd December 2015

  • Central government may introduce special insurance for weavers

    K. Ravindra, the minister of Backward Classes Welfare and Excise, has announced that the government is planning on launching special insurance policies targeted at the weaving industry. He also announced that the government of India was going to release Rs. 110 crore for a state government intention to announce a waiver of loans worth Rs. 163 crore. The announcement was made at an event where the minister was engaged in distributing handloom equipment to weavers. He also laid the foundation stone for the upcoming Devala Maharshi Weavers’ Co-operative Society which is located in Kappaladoddi which is a part of the Krishna district of Andhra Pradesh.

    23rd November 2015

  • Cashless insurance scheme for government employees

    The Punjab government has made cashless insurance schemes mandatory for all its employees. It has also issued directions for member enrolment forms which should be submitted till November 30 to the concerned DDOs so that the employees can avail benefits under the scheme.An official spokesperson said that according to Punjab Government employees and Pensioner Health Insurance Scheme (PGIPHIS), all employees would get the annual cashless insurance facility up to Rs 3 lakh with effect from January 1, 2016.This insurance scheme will be mandatory for employees currently working, pensioners, new employees after the expiry of enrolment period. Pensioners can avail this in special circumstances and it would be optional for all India service officers, who are currently working.Under this scheme, the state government has made arrangements for Indoor medical treatment and care for pre-decided and hazardous diseases.

    16th November 2015

  • Indian insurance firms to invest Rs 140 billion on IT in 2016

    The IT budgets of most Indian insurance companies is expected to rise in 2016. Insurance companies are expected to invest around Rs. 140.8 billion on IT products and services, which is a 9.6 percent increase as compared to 2015

    According to a research, Indian insurers are keen into digitalization, especially analytics capabilities. They are focused into expanding their business in the domestic market through digitization. This move of technology investments is driving growth in IT services, consulting services in particular, and enterprise software. The estimated spend is expected to reach around Rs. 45.2 billion, which is approximately 32% of the IT spending for insurance sector.

    2nd November 2015

  • Farmers to get agricultural insurance from United India Insurance

    United India Insurance, along with the government will provide farmers in the agricultural sector with a special insurance cover. The package will be uniform in nature, which will cover crop, accident insurance, health and agricultural implements. The agriculture ministry and insurance companies are in discussion to formulate a new policy. United India Insurance will announce an exclusive insurance product for this sector shortly.

    22nd October 2015

  • Financial and Social progress with an insurance index is needed in India

    A need to set up an insurance index is required to measured, and quantified with its financial and social progress. Insurance growth is not subject to only figures of premiums and numbers of policies. An index is required to keep a check on the relevant policy makers and players of the industry to have financial inclusion and reach markets of potential value. There will also be a need to gauge the number of policies held by males and females and the gender based view if the insurance and financial services are accessible to both genders equally or not.

    19th October 2015

  • President of India wants for Foreign Direct Investment for many sectors

    With India emerging as one of the world’s largest economies, Pranab Mukherjee, says he would like more Foreign Direct Investment in various sectors like insurance, defence, railways and even construction. He is also hoping that these investments will be greater with the opened up policies.

    The bilateral trade between India and Jordan has crossed $ 2 billion last year and hopes to cross $ 5 billion by 2025.

    12th October 2015

  • New insurance norms issued by IRDA

    The IRDA issued new guidelines to the CEOs of all the insurance companies saying that the universal life products will be called as Variable Insurance Products from now and that they will not be permitted on unit linked platform. The maturity benefit will be equal to policy account with terminal bonus and that the guaranteed rate and bonus will be pertinent to the balance in the policy account. The VIP will provide mortality cover and other contingency will not be covered except death. Only regular premiums are allowed and they have to be shown in different components. The minimum premium paying term is fixed at 5 years and the lock in period is 3 years. Top-up premiums are allowed through the term. Partial withdrawal is not allowed but a loan facility is allowed.

    9th October 2015

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