At home | Beauty | Diet & Fitness | Family Health | Style File | Fashion |Food & Entertainment |Grandma's Corner| Healing | Indian Weddings|Pregnancy & Parenting | Relationships | Social Graces| Teen Park |Women & Careers | Women & the Law| Women & Money | Women & Travel
Lesson 1
Introduction of the Host
Mr.Harikumar is a freelance journalist with rich experience gained from
working with leading periodicals and dotcoms. His association with leading
financial portals has contributed greatly to
his ability to deal with classroom sessions in the financial sector, especially
investments. Currently, he is a columnist with some of the well known
publishing companies. Some of his published works on mutual funds and
insurance have got wide acclaim.
INSURANCE BASICS- Concept
and Convenience
Are you prepared for any unforeseen, untoward
eventuality with regard to your health, life, or possessions?
If not, here is the solution in
the form of Insurance. Insurance is not just a convenience, it is intended to replace things
without facing severe financial hardships. Insurance is one of the investment
routes to save tax. Insurance has all the lure of a state lottery. Tickets
don't cost much, but the hit fetches a big cheque. Since insurance is
optional and has hardly any impact on one's daily life, people tend to
overlook this. However, it is always better to be safe than sorry.
Nowadays, the buzzword in the financial sector is
insurance. With the advent of international insurance players
in India, the word has got a wider connotation. The print and visual media
has afforded great hype to this sector through articles and advertisements,
thereby increasing public awareness of the need to insure themselves and
their possessions. Till recently, life insurance was the monopoly of Life
Insurance Corporation of India (LIC) and the right of general
insurance was vested with General Insurance Corporation
(GIC). But as the government has allowed the private sector
to join the fray, this sector is gaining momentum, and prices have become
competitive.
Insurance indemnifies a person's life or his belongings - including financial
loss. Though the term is difficult to define, the following two points
will help to clarify the concept:
1. Transferring the risk from one individual to a group. A group
of 10 people insure themselves and pay for it. However, misfortune strikes
only one person.In other words, the person whose interest is at stake,
would be indemnified by those who are comparatively safe.
2. Eventually, the losses are shared, on an equitable basis by all members
of a group. The above two points will allay the fears and doubts of those
who feel that they have wasted their money by purchasing insurance if
there is no loss during the term.
Another complementary definition is that Insurance
is the promise made by the insurance company to the insured public to
pay for the damage caused in the event of a contingency.
Insurance does not eliminate risk. It only provides a compensatory package for any loss incurred, thereby
mitigating the effect of suffering. In addition,
it must be remembered that insurance is not considered an investment.
It is rather an expense for an individual to meet sudden expenditure
in case of unforeseen circumstances.
The following are the benefits of insurance:
a) Inculcates the habit of investing money
b) Entitles you to rebate under Income Tax @20 per cent of the premium
paid.
c) The Life Insurance policy can be used as collateral for housing as
well as other loans.
d) Entitles you to get part of the profit of the insurance company in
the form of bonus which is paid as a lumpsum at specified intervals.