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Suppose you have worked hard for many years and saved Rs 10 lakh. Suddenly a family member fell ill with a major illness. The hospital bill reached Rs 8 lakh. Or your new car was completely damaged in an accident. In these conditions your entire savings may be lost.

This is where insurance becomes the shield of your financial security. Insurance means that you pay a small premium every month or year and in return, if needed, the insurance company helps in compensating your big financial loss as per the set rules. In today's time, considering the increasing medical expenses, road accidents, natural disasters and any other untoward incident in life, insurance is not just an option but is considered an essential financial security.

What is insurance?

Insurance is a legal contract between an insurance company and a customer agreeing that the company will provide financial assistance in the event of an accident, illness, death, theft, fire or other covered peril. In return the customer pays the premium timely.

For example, if you have taken health insurance of ₹ 10 lakh and the hospital bill comes to ₹ 6 lakh, then as per the terms of the policy the insurance company pays that expense. This keeps your savings safe.

Why is insurance necessary?

1. Saves from medical expenses

Today, in big cities, the cost of treatment for a serious disease reaches lakhs. If you have health insurance, the insurance company pays a major part of the treatment cost. In case of conditions like heart surgery, cancer treatment or admission in ICU, health insurance reduces the financial burden on the family.

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2. Provides financial security to the family

If any misfortune happens to the earning member of the family, life insurance provides financial help to the family. Due to this, there is no problem in meeting children's education, household expenses and other important needs.

3. Keeps your savings safe

Many people save money for years, but a big accident wipes out the entire savings. Insurance works to protect your savings from such sudden expenses.

4. Security of vehicle and property

If your car, bike or home gets damaged due to accident, fire, theft or natural calamity, Motor Insurance and Home Insurance help in reducing the financial loss.

5. Get mental peace

The biggest advantage of having insurance is that in difficult times, money worries are reduced to some extent. You focus on getting out of the problem instead of focusing on treatment or compensation for the loss.

Which insurances are considered most important?

1. Health Insurance: For hospital and treatment expenses.

2. Life Insurance (especially Term Insurance) : For the financial security of the family.

3. Motor Insurance: For car and bike. Third-party motor insurance is legally mandatory in India.

4. Home Insurance : For the safety of the house and the things kept in it.

5. Personal Accident Insurance: For financial assistance in case of death or disability due to accident.

What things should be kept in mind while taking insurance?

• Choose the right policy as per your need.
• Don't decide just by looking at the low premium.
• Please read what will be covered and what will not.
• Understand the claim process first.
• Pay the premium on time, so that the policy remains in force.

Example: Ravi pays a health insurance premium of ₹900 every month. One day he suddenly had to undergo surgery for kidney stones, which cost the hospital ₹2.5 lakh. If there was no insurance, Ravi would have had to break his savings. But since it was health insurance, most of the expenses were covered by the insurance company as per the terms of the policy. This is the real benefit of insurance – protection from big financial risks by paying small premiums.

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