National Insurance Day: Spreading Awareness About Insurance In India

The Indian insurance industry has witnessed rapid growth in the last decade. A majority of the population, however, still lives without any kind of insurance. The COVID-19 pandemic has exposed the gap in the health coverage of the Indian population. 70% of the people in the Indian population remain without health insurance coverage. Though health insurance has received ample attention during the pandemic, other types of insurance, like life insurance, car insurance, and house insurance, should be given equal importance. The National Insurance Day, observed on June 28, was created to increase awareness about insurance and its benefits. Read along to know more and stay secure.

Insurance products have been divided into two broad categories in India: life insurance and general insurance.

• Life insurance is an agreement between the policyholder and the insurance company under which the insurer promises to pay a mutually agreed amount to the people nominated by the policyholder in the event of their unfortunate demise. The insurance company is bound to honour the contract only if the policyholder pays the premiums without fail. There are various types of life insurance products, and many provide investment and savings avenues along with providing insurance cover.

• General insurance or non-life insurance is a broad category of insurance products designed to provide financial protection against losses or damages to property and health. General insurance operates on a reimbursement basis, where the insurer compensates the policyholder for specific expenses or damages incurred. This category encompasses diverse sectors, including health, motor, fire, marine, travel, and home insurance, ensuring a comprehensive safety net for one's physical assets and medical well-being.

Also Read - types of insurance

Benefits of Insurance in India

The benefits of insurance are generally quantified on the individual’s level, but the insurance industry is also a crucial component of the national economy. Let us take a look at the various benefits of insurance.

• Safety and Security of Individuals and Businesses: Having insurance coverage ensures that an individual or a business doesn’t have to face financial stress in times of uncertainty. It provides financial certainty to people in unstable times. For instance, life insurance acts as a financial protective ring for families in the event of the death of an earning member. Similarly, the payout from an insurance plan has saved many businesses from doom.
  

• Generates Long-Term Capital: Every country needs long-term funds to develop infrastructure and spur growth. The insurance sector is one of the major sources for infrastructure development in the country. The premiums collected from millions of people every year are accumulated and are used as a stable, long-term financial resource. The creation of world-class infrastructure also generates employment and leads to overall prosperity.
  

• Helps During Medical Emergencies: With the cost of healthcare rising at a rapid pace, health insurance and life insurance can play an important role in the financial well-being of vulnerable families. India has the largest population of people who pay out of their pocket for medical treatment. Having insurance coverage is equally important for the young as well as the elderly. Many life insurance policies provide the option to cover terminal and critical illnesses along with life cover. Life insurance with terminal illness cover or a health insurance policy has become a necessity with the rising incidence of lifestyle diseases.
  

• Diversify Risk: If a person has to build a financial buffer at an individual level, they may have to set aside a substantial amount of money, which can be used in other productive ways. Insurance diversifies the risk among a large number of people and reduces the burden at the individual level. Whenever a sum assured is paid out, it is deducted from the accumulated corpus collected from millions of policyholders.
  

• Wide Coverage: While non-life insurance products are generally designed to cover a specific risk, life insurance plans can be used to cover a variety of risks. Life insurance plans like term insurance can be used to cover the risk arising out of long-term liabilities such as home loans. On the other hand, if you opt for a terminal illness, disability or accidental cover with life insurance, it will cover you against the mentioned risks, along with providing life cover.

Conclusion

The availability of new-age technologies has transformed the way insurance and other financial services sectors operate. Insurance companies have adopted newer distribution models to improve customer experience. You can easily purchase an insurance plan from the comfort of your house. If you want to enjoy life cover as well as save for the future, opt for a plan from Canara HSBC Life Insurance. Take a proactive step today, review your needs, choose wisely, and secure a safer tomorrow for your family.