Importance Of Understanding An Insurance Plan

Non-life Insurance plans are offered by Non-life Insurance companies, also called as General Insurance companies in India. They are different from Life Insurance companies that offer long term life insurance products. An insurance policy is a legal contract between an Insurer (Insurance Company) and the Insured (the person who has purchased insurance) to cover the Insured in case of an unforeseen risk. Investing in an insurance policy is an essential part of financial planning.

However, before investing in one it is important to thoroughly understand an insurance policy and its workings. To begin with, knowing the role of insurance coverage will help you understand why insurance is so important. Let’s understand how insurance plans protect us from uncertainties in life.

  • It provides you safety and security

    Life can be rather uncertain and an insurance plan offers you financial protection by providing you with coverage in the event of an unexpected loss.

  • Offers medical support

    A health insurance policy stands by you when you most need it, by providing you coverage for certain medical conditions.

  • Safeguards your travels

    Travel insurance is another useful tool that every traveller must invest in. It covers for some or all losses incurred owing to medical emergencies, loss of baggage, third party damage, etc. while travelling.

  • Protects your belongings

    An insurance plan covers losses incurred to your physical belongings like a car or home, owing to an accident or mishap. It also covers for any bodily damage that may have undergone during the event.

Apart from the benefits you receive from its coverage, another reason why it is important to understand insurance is because of something known as insurance exclusions. Any kind of risk that is not covered by your insurance policy is exclusion. The cost of these exclusions need to be paid for directly by you and are not reimbursed by your insurance company. Therefore, before buying an insurance plan, you need to be well aware of what it includes and excludes, as exclusions narrow your coverage scope.

Depending on the type of insurance you avail of, these exclusions also differ. Exclusions are included in the terms and conditions of an insurance policy. However, very often we overlook the fine print of our policies, thus missing out on its exclusions and limitations. Doing so may lead to insurance claim denial.

While earlier, buying an insurance policy from an agent (offline policy) was the only option available, today you also have the option of buying insurance online. A number of reputed insurance providers offer customers comprehensive online policies to choose from. Apart from enjoying lower rates, you may also compare different insurance policies online and get a clearer idea of what they include and exclude. This ensures that your insurance claim process is a smooth sailing one.

Therefore, studying an insurance plan in depth before you invest in one is essential as it helps you enjoy complete value for money.

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