Insurance\n\nThe life and property of an individual are surrounded by\u00a0the risk of death, disability or destruction. These risks may result in financial losses. Insurance is a prudent way to transfer such risks to an insurance company.\n\nWhat is Insurance?\nInsurance is a legal agreement between two parties i.e. the insurance company (insurer) and the individual (insured). In this, the insurance company promises to make good the losses of the insured on happening of the insured contingency. The contingency is the event which causes a loss. It can be the death of the policyholder or damage\/destruction of the property. It\u2019s called a contingency because there\u2019s an uncertainty regarding happening of the event. The insured pays a premium in return for the promise made by the insurer.\n\nHow does insurance work?\nThe insurer and the insured get a legal contract for the insurance, which is called the insurance policy. The insurance policy has details about the conditions and circumstances under which the insurance company will pay out the insurance amount to either the insured person or the nominees. Insurance is a way of protecting yourself and your family from a financial loss. Generally, the premium for a big insurance cover is much lesser in terms of money paid. The insurance company takes this risk of providing a high cover for a small premium because very few insured people actually end up claiming the insurance. This is why you get insurance for a big amount at a low price. Any individual or company can seek insurance from an insurance company, but the decision to provide insurance is at the discretion of the insurance company. The insurance company will evaluate the claim application to make a decision. Generally, insurance companies refuse to provide insurance to high-risk applicants.\n\nWhat are the types of insurance available in India?\nInsurance in India can be broadly divided into three categories:\n\nLife insurance\nAs the name suggests,\u00a0life insurance\u00a0is insurance\u00a0on your life. You buy life insurance to make sure your dependents are financially secured in the event of your untimely demise. Life insurance is particularly important if you are the sole breadwinner for your family or if your family is heavily reliant on your income. Under life insurance, the policyholder\u2019s family is financially compensated in case the policyholder expires during the term of the policy.\n\nHealth insurance\nHealth insurance\u00a0is bought to cover medical costs for expensive treatments. Different types of health insurance policies cover\u00a0an array of diseases and ailments. You can buy a generic health insurance policy as well as policies for specific diseases. The premium paid towards a health insurance policy usually covers treatment, hospitalization and medication costs.\n\nCar insurance\nIn today\u2019s world, a car insurance is an important policy for every\u00a0car owner. This insurance protects you against any untoward incident like accidents. Some policies also compensate for damages to your car during natural calamities like floods or earthquakes.\u00a0It also covers third-party liability where you have to pay damages to other vehicle owners.\n\nEducation Insurance\nThe child education insurance is akin to a life insurance policy which has been specially designed as a saving tool. An education insurance can be a great way to provide a lump sum amount of money when your child reaches the age for higher education and gains entry into college (18 years and above). This fund can then be used to pay for your child\u2019s higher education expenses. Under this insurance, the child is the life assured or the recipient of the funds, while the parent\/legal guardian is the owner of the policy. You can estimate the amount of money that will go into funding your children\u2019s higher education using\u00a0Education Planning Calculator.\n\nHome insurance\nWe all dreaming of owning our own homes. Home insurance can help with\u00a0covering loss or damage caused to your home due to accidents like fire and\u00a0other natural calamities or perils. Home insurance covers other instances like lightning, earthquakes etc.\n\nWhat are the tax benefits on insurance?\nApart from the safety and security benefits of buying insurance, there are also the income tax benefits that you can avail.\n\n\n \tLife insurance premium of up to \u20b91.5 lakh can be claimed as a tax-saving deduction under\u00a0Section 80C\n \tMedical insurance premium of up to \u20b925,000 for yourself and your family and \u20b925,000 for your parents can be claimed as a tax-saving deduction under\u00a0Section 80D\n\nThese claims have to be made at the time of\u00a0e-filing income tax returns.\n\nConclusion\nBe it life insurance, health insurance or general insurance, you can buy an insurance policy offline as well as online. Just like there are insurance agents who will help you buy a policy, there are websites as well that you can buy a policy from. Ensure that you have done your research before choosing and investing in an insurance policy.