Brief Details of insurance Importance and Benefits of Insurance

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There are many insurance products available nowadays and almost every person and thing can be insured. It will not be important for an ordinary person to know the types of insurance but it is very important for professional people like financial advisors, insurance agents or people associated with it to have such basic information.

It helps in building up the level of confidence as well as it helps in giving professional advice to its clients.

Well everyone should have this kind of information because insurance is an important part of our life. In this post, we will discuss what is insurance, types of insurance (non-life and life).

Although, the insurance market has grown over the years but it is still operating under the same principle.

As you would know that to promote and regulate insurance companies related to insurance and re-insurance, an organization is created in every country like Insurance Regulatory and Development Authority of India (IRDAI) in India. The job of such organizations is to promote insurance products in the country and at the same time protect the interests of the policy holders so that no insurance company can cheat any customer.


That is why whenever an insurance company brings a new insurance product, it first has to get approval from an organization like IRDAI to sell the product. If the organization finds any defect in the product, the company can also refuse to sell the product.

There are basically 3 types of insurance: life insurance, non-life insurance, and re-insurance. Whatever types of insurance you see next, all those insurances come under these three.

Right now we will discuss about insurance and types of insurance.

What is Insurance?

Insurance is a legal agreement in which two parties (insured and insurance company) come to mutual consent. In insurance, the insured has to pay a fixed premium and in return the insurance company has to indemnify the insured on the occurrence of the event.

In this way, insurance provides protection to a person or his family. The amount can be paid to the insurance company in one go or also as annual/monthly/quarterly/half-yearly premium. The benefits available depend on the type of insurance. Some insurance policies have death benefits and in some, the sum assured is available on completion of the policy.

Read : Share Market से प्रतिदिन 1000 रुपये कैसे कमाए ?

What is the importance of insurance in our life?

Most of us are not financially strong enough to compensate for the loss in case of any untoward incident.


It has been seen many times that after the death of the head of the family, the rest of the family falls into economic recession, due to which he has to sell his house.

But people who have a policy like life insurance , they get financial help from the insurance company so that they can survive.

Similarly, in a motor insurance policy, when our vehicle causes damage to another person or his property in an accident, then by law we have to compensate for the loss of that person, which the motor insurance company pays on our behalf.

But those who do not have a motor insurance policy, they have to compensate the loss from their own pocket. Here below we try to understand the importance of insurance with the help of examples.

Suppose John is the only earning member in his family and has two children and a wife. John’s monthly income is ₹ 30000, due to which he is able to support his family well.

But he does not have a life insurance policy. Now a day John dies in a road accident.

what will happen now? Now the earning person in the family is no more and the ₹ 30000 he used to get every month will stop coming. Due to which the education of the children will be affected first and after that it will be difficult to maintain the household.

Now John’s wife will be forced to do some job but she may not be able to earn as much as John used to earn. John’s wife will have to face a lot of difficulties until John’s children grow up and start working.

He may not be able to provide good education to his children so that his children will get less chances of getting a good job.

Now from the above example you can clearly see that John was earning very well but he never thought of any untoward incident and never even thought to secure his family for that which his family entered into an economic downturn.

On the other hand, if John had taken a life insurance policy, the family’s misery would not have reduced but he would not have had to face financial constraints (the claim amount depends on the type of insurance taken and the premium).

The family could live a good life with the claim amount from the insurance in hindi.

type of insurance

Types of Insurance – Types of Insurance in Hindi

Basically there are three types of insurance:

  1. Life Insurance
  2. Non-Life Insurance – General Insurance
  3. Reinsurance – Reinsurance

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1. Life insurance

Life insurance is one of the types of insurance. In which the insured gets coverage against death. In life insurance, two parties (the insurance company and the policyholder) sign a contract with mutual understanding.

In a contract of life insurance, the policyholder pays a fee called premium to get coverage against specified events and the insurer pays a fixed sum assured in the event of a loss.

Nowadays life insurance companies offer many types of insurance to meet all the insurance needs.

For example term insurance or term life insurance is suitable for individuals who want to financially strengthen the family in case of their own death, life insurance is best for those who want lifelong protection, and so on endowments Insurance plans are suitable for those who want to invest their money with life insurance.

The basic purpose of life insurance is to provide financial assistance to the family of the insured after his death. You also get to see some such life insurance policies in which the insured gets a fixed amount on the completion of the policy term.

But as mentioned, the basic purpose of life insurance is to provide protection against death. In life insurance, you get to see the types of insurance given below.

types of life insurance

types of life insurance

a) Term Insurance or Term Life Insurance

Term insurance is also called pure life insurance. In this, the insured buys an insurance policy for a fixed term (5 years, 10 years, 15 years and above) and if the life insured dies during the term of the policy, the sum-insured is decided by the insurance company. given to the nominee.

If the Life Assured does not die by the end of the policy, no cash value is paid.

b) loan life insurance

In this type of insurance, the borrower is prepared to repay the loan taken by him in the event of his death. Having such a policy can save the borrower’s family from the financial burden of debt after his death.

c) Permanent Life Insurance or Permanent Life Insurance

A life insurance policy is taken for a fixed or indefinite term and the insured continues to pay premiums for the term of the policy. Permanent life insurance policy continues as long as the insured continues to pay premiums.

Such policies also accumulate cash-value which is passed on to the insured on the completion of the policy term or to his/her nominee on his/her death.

There are two types of insurance available in permanent life insurance: whole life insurance and universal life insurance.

d) Endowment Insurance

This policy is designed to pay the Sum Assured on the death of the Life Assured and on the survival of the policy holder at the end of the policy term. In this way, benefits can be availed in both the ways in this policy. Endowment insurance policy is a type of savings policy that comes with insurance cover.

If a person wants retirement planning or savings account with insurance cover, then he can opt for such a policy.

There are other policies in life insurance such as Unit Linked Life Insurance Policy and Money-Back Policy for more details read this post, ‘ Types of Life Insurance ‘.

2. Non-life insurance

Non-life insurance is also known as general insurance. This type of insurance provides coverage for damages other than benefits available for example health insurance, home/property insurance, auto insurance, business insurance etc.

In other words, you can say that other than life insurance products the types of insurance that provide cover are non-life insurance products. Mobile or gadget insurance comes under non-life insurance in which the policyholder gets compensation for physical damage or damage to his electronic gadgets like mobile phones, laptops, tablets, LED TVs, notebooks, etc.

Health insurance is also classified under non-life insurance. Health insurance policies provide cover for medical expenses incurred in hospital for treatment of accident or illness.

Here below are the types of general insurance.

a) Motor insurance

In motor insurance, insurance is purchased for the vehicle in which the vehicle is indemnified and third party damages are indemnified. By law, the driver must have a third party insurance or comprehensive policy to drive a vehicle on the road.

We have told in separate posts that what are the types of motor insurance and which motor insurance should be bought.

b) Home Insurance

Home insurance provides protection to the house and its belongings, it is also one of the types of insurance. In case of loss of house in natural calamity or theft of home goods, insurance is done by the insurance company.

Most people do not get home insurance, but such policies are very cheap and their benefits are also high, in our separate post, we have discussed this topic in detail.

c) Travel insurance

In this type of insurance, as the name suggests, the policy provides coverage for accidents and medical emergencies that occur during travel. Travel insurance is available at very affordable rates and mostly where you go to buy travel insurance while booking air or railway tickets.

It is worth mentioning that after the end of the trip, the travel insurance also lapses.

For example, suppose you have taken travel insurance for air travel from Delhi to Australia, now when you reach Australia safely, your policy will be closed.

d) Gadget Insurance

It is a new type of insurance that insurance companies have devised to provide protection to the existing technological gadgets. Coverage for electronic devices is provided in such an insurance policy . Insurance policies can be taken for almost every electronic product such as mobile phones, laptops, notebooks, LED TVs.

In a separate post, we have told about the famous gadget insurance companies of India.

types of health insurance
types of health insurance

e) Health insurance

Health insurance also comes under general insurance. This type of insurance provides coverage for health related needs which include hospitalization expenses and even compensation to the family after death.

There are many types of health insurance policies which are discussed here .

f) Crop Insurance

Crop insurance has been prepared for the farmers, in which if the farmer’s agriculture is damaged due to natural calamity or any other reason, then the farmer gets compensation by the insurance company. Some types of insurance have also been introduced by the government to provide protection to the farmers.

g) Fire insurance

Fire insurance covers damages caused by fire. Often businessmen lose millions of crores due to fire, so to avoid such losses, they can choose this type of insurance.

h) Marine Insurance

Marine insurance is taken to cover damages caused to goods in voyage during import and export . You must have seen many times that big ships get sunk due to sea storms and all the goods loaded in them also sink with them, due to which the traders suffer a lot.

In such situations the loss is covered by Voyage Marine Insurance.

i) Employer Liability Insurance

If an employee is injured or dies while working in a factory, then by law the owner of the company has to pay compensation to the person or his family.

That is why employers usually take out employer liability insurance whereby the insurance company compensates its employees on its behalf.

3. Reinsurance or Reinsurance

No one is safe in today’s era, not even the insurance company. Insurance companies are also exposed to many types of risks.

When an insurance company insures itself against certain risks (for example, if too many claims have to be paid in one go), this type of insurance is called a reinsurance policy . .

Insurance companies also buy reinsurance policies from other insurers to bear the additional financial burden. It is a risk management technique to run the company in the long run.

Insurance companies who provide insurance to other insurance companies are called reinsurers. Here are some of the reasons why an insurance company buys reinsurance.

  • To bear the financial burden, if the claims exceed the required limit.
  • When the insurance company is going to provide cover for a major risk.


Insurance in Hindi

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