Insurance safeguards a person from various uncertainties in life. Insurance can be defined as ‘a contractual arrangement between the insurance company (insurer) and the insurance policyholder (insured) for a pre-defined consideration (insurance premium).
The insurer promises to pay a definite amount to the insured upon the occurrence of a specific event.’ The event here refers to any unexpected happening, which is not under the control of the insured.
Benefits of Insurance
- Insurance gives a person or their business a sense of security and safety as they are compensated for an uncertain loss.
- Insurance is a form of risk management. It helps a person to be financially secured against contingencies.
- The medical insurance policies will help us to pay for our medical emergencies, treatments, and hospital bills.
- Insurance plans provide financial stability to the family even upon the death or accident or any medical emergency of the policyholder.
- Insurance plans will ensure that your children are financially secured to pursue their education.
- An insurance plan protects our house and properties from unforeseen calamity or disasters.
- There are auto insurance plans that protect our vehicles from mishaps and accidents.
- Regular payments in Insurance will help to build wealth and savings for your near future, i.e., you pay premiums regularly and a part of this premium will go towards life coverage while the other part goes towards either a savings plan or investment plan, whichever we choose based on our future goals and needs.
- The sustainable economic growth of the country is possible with the help of the Insurance sector in the following ways.
- It helps to mobilize household savings. The insurance sector generates funds through premiums collected from the policyholders. These funds are then utilized for the infrastructure development of the nation.
- The insurance sector also provides employment opportunities for millions of people.
- Insurance gives stability to the functioning of businesses and helps to generate long-term funds for industrial projects.
Types of Insurance
There are several types of insurance available in India. The following are some of the important ones:
- Life Insurance
- Health Insurance
- Auto Insurance/ Car Insurance
- Education Insurance
- Home Insurance
Insurance Sector in India
In India, there are 24 life insurance and 33 non-life insurance companies. Life Insurance Corporation (LIC) is the sole public sector company in the Life insurance segment of the Insurance Sector.
The Insurance Regulatory and Development Authority of India (IRDAI) controls and regulates the Indian Insurance sector.
According to IBEF (India Brand Equity Foundation), Ministry of Commerce and Industry, Government of India, the insurance industry has recorded significant growth after liberalization. The gross premium collected by life insurance companies in India increased from Rs 2.56 trillion (US$ 39.7 billion) in FY12 to Rs 7.31 trillion (US$ 94.7 billion) in FY20. During FY12–FY20, the premium from the new business of life insurance companies in India increased by 15% to reach Rs 2.13 trillion (US$ 37 billion) in FY20.
