Insurance is a protection against financial hammering arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financial militate against adverse financial loads suffered. Insurance is a contract between two parties, the insurer or the insurance company, and the insured, the person seeking the cover.
Within this contract, the insurer agrees to pay the insurer for financial losses arising out of any unforeseen events or risk in return for a regular payment of premium. Therefore, these insurance plans are also called as a Risk Cover Plans, which means to financially compensate for losses that occur uncertainly through accident, illness, theft, natural disaster.
Insurance Scope in India: Insurance is a nice-looking option for investment but most people are not aware of its advantages as an investment option. Remember that foremost and first, insurance is about risk cover and protection. By buying life insurance, you buy peace of mind. Insurance also serves as an excellent tax saving mechanism. The Government of India has provided tax incentives to life insurance products in order to facilitate the flow of funds into productive assets.
The insurance sector has opened up for private insurance companies with the enactment of IRDA Act, 1999. A large number of companies are competing under both general and life Insurance. The FDI cap/equity in this sector is 26% and the proposals have to be cleared by Insurance Regulatory and Development Authority (IRDA) established to protect the interest of holder of Insurance policy and act as a regulator and facilitator in the industry.
Some of the major players in this sector are LIC, Max New York Life Insurance, Bajaj Allianz, ICICI Prudential, HDFC Standard Life, Metlife Insurance, Birla Sun Life Insurance, etc.
various types of instruments and policies are coming up in the market to attract more clients. Most of the population of India is not insured, hence there is a lot of scope in this sector and a number of companies are planning to enter the sector.
Types of Insurance:
- Life Insurance - Insurance guaranteeing a particular sum of money to a designated receiver upon the death of the insured, or to the insured if he or she lives beyond a certain age.
- Health Insurance - Insurance against expenses incurred through illness of the insured.
- Liability Insurance - This insures property such as automobiles, property and business/professional mishaps.