What is the importance of insurance?

Insurance is very important for future protection. The premium is monthly but the advantage in future.

Insurance 

Insurance is one of the ways you may mitigate and hedge alternative the risk of unforeseen losses. When risks lead to rewards, the downside is a lot possible loss. Damage can happen due to multiple reasons both on professional and personal fronts. 

When you can start a new venture by investing your savings, you have a chance to either make a profit or a loss by selling these goods. However, if you can happen to lose the goods in a accident you lose the chance to sell them at all. While a business risk and damage is expected and can lead to higher profits, unexpected loss of goods can only lead to financial loss or damage . Therefore, risks like serious damage to movable and immovable property, assets,hospitalization and theft and similar calamities must be insured against.

Why is  insurance important? 

Insurance works like a mattress which helps you or your family return back financially after an unfortunate event. Whether it's business or family both can benefit immensely from insurance. 

1. Distributes Large Risks

Insurance is a financial instrument. The risk of important loss due to an event is borne by a large people or group of people exposed to the same possibility in a business. Thus as the losses are distributed over a large group of people making it bearable for each individual.

2. Provides Financial Stability

Without insurance, it will be extremely costly and damages for businesses to bounce back after a major loss of inventory. Natural hazards, accidents, damages, theft or burglary can be affected the financial status of a business or a family. With Insurance compensating a large part of the losses businesses and families can be bounced back rather easily. 

3. Helps Economic Growth

Insurance companies pool a maximum amount of money. Part of this insurance money can be invested to support or helps investment activities by the government. Due to the safety worry insurers only invest in Gilts or government securities. On the other hand, governments can be raised funds easily from insurers for large public projects, which aid in economic growth.

4. Generates Long-Term

Wealth Insurance is often a long-term contract, especially life insurance. Life insurance planing can continue for more than three decades. Within this time they will collect a large amount of wealth or assets , which returns to the investor if they stay. If not, the wealth goes to their family. 

Need for Insurance

Insurance is an important financial tool that helps in managing the unforeseen costs smoothly without much hassle. However, this is not the only reason a person essential is a insurance. Listed below are a few more reasons you important to buy an insurance:

1. Tax Benefits

Any installment received from life insurance company plans are completely tax-free if your investments have met a few simple situations . Most life insurance installment payments and investments are tax-deductible. Thus as insurance reduces your tax liability in the present and future. 

2. Achieve Retirement Goals

Insurance plans like guaranteed savings planing and ULIPs are some of the best retirement saving options available. You can also use postpone annuity plans to saveguard your post-retirement income and revenue when you are close to retirement.

3. Stress-Free Life

With the right insurance planing, you can remain stress-free from unforeseen risks, injury causing major financial damage. Insurance will help you and your families bounce or return back to your normal financial life quickly after a death. Insurance also keeps your long-term investments safe from sudden financial shocks caused by emergencie and over time.

Types of Insurance

Insurance is a financial protection or mitigation tool alternative possible unforeseen hardships. The Insurance company assesses the possible hardship and pays in line with the contract policy.

Such an amount is termed between “Sum Assured” or “Sum Insured” or “Insured Value” etc. It is compulsory to know how insurance can make a positive influence on our lives. 

Insurance is now a “must-have" rather than a “good-to-have" part of our financial plan. There are largely 2 types of insurance and let us understand how either is relevant or episodic to you:

1. Life Insurance

Like any responsible or main person, you would have planned for a comfortable life depends on your income and career protection. You and your family will be dreaming of basic things such as a good house, comfortable life lead and quality education for children. But what if you will not be around to fulfill these dreams and plans? Life insurance plans can help you plan for the financial future of your family even in your absence.

a) Child Insurance Plan

Child insurance plans like ULIP and savings plans profit an investment value with right time. They also can provide a life cover to the insured. These plans are perfect to invest in your child’s higher education and marriage goals and comfortable lifelead. 

b) Term Insurance Plan

Term life insurance is the pure form of life insurance. Term life cover only helps a death benefit for a limited period. The profit of term insurance is that you can provide an sufficient financial safety umbrella to your family at a nominal premium expenditure . Although the emotional loss can never be made up for, the loss of family income or earn can be backed by life insurance. iSelect Smart360 Term Plan is an example of a term life insurance policy offered by Canara HSBC Life Insurance Company.

c) Health Insurance Plan

Health insurance helps financial support against sudden medical costs and health emergencies expenses. You can buy Mediclaim and critical illness health treatment insurance plans. Mediclaim insurance can take care of medical bills expenses and surgery expenses, whereas critical illness insurance helps a lump sum amount for life-threatening illnesses. 

d) Unit Linked Insurance Plan (ULIP)

ULIPs are investment cum insurance plans that come with a dual profit of life cover plus back on investment. In case of unfortunate death of the policyholder, the nominee would receive the Sum Assured or else the policyholder would receive the fund value at the end of the policy time.  ULIPs allow partial withdrawals too. Amounts paid towards installment are deductible, from taxable income, under section 80C whereas all pay outs are exempt from tax under section 10(10D).

e) Endowment Plans

An endowment plan is planned as a safe investment strategy that also helps your family a financial situation in case of your untimely demise. At the time of maturity, endowment plans give back the guaranteed amount + bonuses + guaranteed annual additions, the insurance payment if any. Most endowment policies help extended life cover even after the maturity value is paid out. 

f) Pension Plans

The pension plans, including Pension4Life of Canara HSBC Bank of Commerce Life Insurance, help you a pension in the form of annuities. You can choose one of the following options after retirement for the income or earn:

Immediate Annuity

The pension starts as soon as you invest a lump sum amount of insurance. 

Deferred Annuity

Invest gradually and start a regular stream of earn a few years later. 

If you have recently retired and would like to invest a lumpsum amount to income a pension, the immediate annuity suits you best. If you have some time to retire, a deferred annuity helps you time to invest over the years and build a corpus. You will get income or earn streams called “annuities” till the end of your life.

2. Non-Life Insurance

Non-life insurance is also mentioned to as general insurance and covers any insurance that is outside the ambit of life insurance. Non life insurance include Motor insurance, property insurance,assets insurance, transit insurance, health insurance etc. fall under non-life insurance. 

a) Auto Insurance

Auto insurance means protection from accidental damages or destroyes to your automobile. Auto insurance also includes recover for third-party damages, including bodily injury or property damage. Auto insurance is also a mandatory or imperative policy if you drive a vehicle on public roads.

b) Home Insurance

Home insurance is a useful insurance cover for the home damage and homeowners. Home insurance can include insurance for the home structure (building) all included cost and the contents within it. The tenant’s home insurance will only include the cover for home contents and not the structure( building) . Home insurance will cover you alternative property damage, assests damage and loss of goods due to fire, theft, etc.

Importance of Life Insurance Policies

In case of the unfortunate early death of the family’s sole breadwinner or income person, the economic situation of the family is jeopardized and they face financial crisis . Let alone the dreams and plans ahead in comfortable lifelead, in some cases, even basic sustenance becomes a question mark. 

Insurance is the best-known financial instrument that acts as a saviour for the family financial status and as a tool for continued economic support . The insurance cover is planned such that the amount substitutes the loss of income and ensures adequate financial support for a reasonably high time. 

Life insurance policies offer many benefits ranging from financial protection to wealth transfer. Using the right policies and terms of investments you may create long-term wealth with life insurance.

1. Peace of Mind

Sufficient financial safety offered by life insurance planing can keep you free from stressing about your family’s future and comfortable lifelead in future . Along with term insurance, you can also safeguard important aims for your child with child insurance plans. 

2. Meet Long-Term Goals

Life insurance means a long-term investment which demands investment discipline and offers growth. Thus, you can start investing directly for long-term aims with appropriate life insurance plans. You can invest in safe plans or go for equity distribution with ULIPs as per your risk appetite.

3. Create Wealth

Life insurance plans like unit-linked insurance plans (ULIPs) help you invest in a mix of equity and debt funds. While the insurance premium stay safe from any tax deductions the plan adds more bonus units if you invest for a higher period. Overall ULIPs can help you build a significant corpus over time. 

4. Happy Retirement

The long-term behaviour and safe investment options make life insurance plans a good option for building a retirement body. After retirement, you can continue to invest the income in pension plans and draw a regular income from it.

5. Leave a Legacy

While life insurance plans help you build an asset that directly benefits your family after your death and expired in time. Since the plan continues till your natural death or 100 years of age, it helps you leave a legacy for the next generations or family person.

6. Tax Benefits

Life insurance plans are one of the best options to save your annual income tax outflow. Also, the returns from life insurance plans are exempt from tax. Thus, life insurance investments also remove your future tax spending cost.  Insurance is now an need part of financial planning that helps both life protection and return on investment.

If you plan well in advance and invest judiciously, you will generate wealth,assests create a corpus for retirement, income or earn a pension and also mitigate alternative financial damages thus helping you and your family complete peace of mind and comfortable life.

Conclusion :

This insurance is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their chairness and not to rely on the contents of the article as conclusive in behavior . Readers should research further or consult an expert in this consideration.