What is insurance? Why is insurance needed?

All about insurance

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all about insurance

What is insurance ?

Insurance is a type of contract, which is executed between two parties. So that the insurance company in exchange for accepting a certain amount of money guarantees payment of the sum insured on the death of the policyholder or at the end of the term, as applicable, along with the profit.

Life insurance is needed to ensure financial security for the family, secure and worry-free life in old age, good health and occupational risks. Also insurance is needed to gain respect from family, friends and relatives.

What are the benefits of insurance?

Insurance covers the risk of your life and property. Apart from this, insurance provides various benefits including increasing financial savings, preserving personal property, providing financial security, reducing dependence on others, profitable investment benefits, income tax relief and improving the quality of life.

What are the steps to insurance?

First of all: 

According to the needs and preferences of the insured, the policyholder will select the plan and submit a written proposal to the company for taking the insurance benefits.


The underwriting department scrutinizes the proposal submitted by the policyholder and accepts or rejects it.


If the proposal is accepted, the prescribed premium of the proposed plan is deposited by the insured in favor of the company, then the company will issue the first premium receipt (FPR) and insurance policy document in favor of the insured.


The regular premium will be paid by the policyholder and the insurance company will provide all financial benefits to the policyholder or his nominee as per the terms and conditions as per the policy documents.

Read more - How to save money

What information and documents must be given to the insurance customer to make the insurance contract?

Name, Age, Occupation, Residence, Insurance Number, List of Insurance, Family History, Nominee Personal History, Physical Structure, Political Status, Economic Status, Moral Risk Information including Birth Registration for Proof of Age, National Identity Card, Passport, Kabinnama, SSC Certificate, as applicable In case of photo, medical file, documents along with medical requirements are to be given.

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