Understanding General Insurance
According to Wikipedia, Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment, known as Premium. It is a form of risk management, primarily used to hedge against the risk of a contingent, uncertain loss. Individuals and Institutions face different types of risks in their life cycles. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. While not all of these risks are controllable, some of these can be managed through the concept of pooling of similar risks.
Insurance plans or policies are divided in 2 categories. They are life and general insurance. Life Insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may provide for income to an insured person's family.
All Non-life Insurances fall under General Insurance, which cover all related costs of the insured as well as his/her belongings. For instance, a Passenger Car Insurance covers your car; Health insurance covers your health, Home Insurance covers your home and its contents and a Travel Insurance policy insures you against untoward events during the travel.
What are the advantages of General Insurance?
General or Non-Life Insurance offers you two kinds of distinct benefits:
A General Insurance policy cover reimburses the insured for a financial loss caused due to certain events as stated in the respective general insurance policy.
It gives you peace of mind during loss and covers major portion or total loss. This depends on the type of policy and the sum assured value of the respective General Insurance policy.
With medical inflation estimated to be running in double-digits, costs for medical procedures have gone up substantially in the last one decade. Imagine being in a situation when you or someone in your family needs to get admitted to hospital for a medical condition that you were never prepared for. There are cases where people abstain themselves from medical treatments due to the exorbitantly high medical costs of treatments and medicines. However, a general insurance in form of a Health policy saves you from such expensive medical costs.
When one takes a Health Insurance plan, the company provides the insured with a safety cover. In simple words, the insurance company takes care of your treatment costs during the period of insurance. The company after you buy the policy from them will be liable to reimburse you whether partially or fully for the treatment cost as stated in the policy. A Health Insurance policy plan can save more than 80% of total cost which is an enormous savings! In certain cases, insurance is mandatory by the law. For instance, you cannot drive any vehicle without a valid auto insurance policy as per the Motor Vehicles Act 1988 in India.
Some of the non-Life Insurance plans that are important for individuals are:
Motor insurance : Having an automobile is more of a necessity and not a luxury. Any person who drives a motor car tends to get his car insured. Car insurance is like a long-term covering the various damage costs which might occur due to unforeseen incidents. Car insurance is just what you need to maintain your car's lovely lustre and stay away from surprising hits on your wallet and mind!
A passenger car policy covers the damage costs which might happen to your car due to any kind of accident. Driving a car without proper car insurance is illegal. Hence, having a Car Insurance is pre-requisite to be able to drive your car.
Health Insurance : A Health Insurance covers various health issues and related medical costs. The details about whether the policy covers existing illnesses and what diseases it will cover and how much sum assured value, are listed in the policy document. Hence, read the policy documents carefully before taking one. Carefully examine that all your requirements are covered and confirm the same personally with the concerned insurance company personnel. It is important to understand the fine print and to be aware of what is not covered in a Health Insurance policy.
Home Insurance : This is another common type of general Insurance policy. Home Insurance policy provides an all-encompassing protection for your home. Your home is your prized possession and it must be given the most trusted protection it deserves. A home Insurance gives you the benefit of affordable coverage for your property and possessions against almost any eventuality.
HDFC ERGO General Insurance Company provides a range of non-life insurance products for individuals as well as institutions (including the large companies and small & medium enterprises) that are comprehensive and affordable. Wherever it is technically possible, HDFC ERGO provides option to individuals to purchase the product on-line.