Life is uncertain and unpredictable. One can only have a proactive measure in place to deal with unpleasant situations. Hence, the concept of ‘insurance’ was introduced with a motive to mitigate the risk and to provide protection. Insurance is the primary way of managing life risk. There are various types of insurance policies available today to protect your loved ones and the things you love. In a life insurance policy, Insurance indemnifies to pay the insured person’s family a certain sum of money in the event of the insured’s demise. When it comes to choosing the right insurance plan, you are spoilt with choices as there are various insurance players in the market offering plenty of unique plans.
In India, there are 24 life insurance companies operating that have been approved and recognized by IRDAI (Insurance Regulatory and Development Authority in India), which is a regulatory body for insurance and reinsurance industries.
Importance of insurance
Insurance is an essential cost that one needs to make in order to secure the future of his/her family. Even the financial advisers suggest you avail insurance before you start with your financial planning. Insurance is an important necessity for various reasons. Following are some of the reasons: Insurance provides you with financial security and safety net:If something unforeseen happens to the bread earner of the family, the financial situation of the family may come to a standstill. Insurance compensation can become a source of income for the family and stabilize the finances. With insurance, your family is financially secure even when you are not around.
2. Insurance safeguards you and your family’s future goals:
The sudden demise of a family’s breadwinner can have the worst repercussions on the family’s financial stability. With insurance, your family can achieve financial stability even when you are not around. Also, their future financial goals will stay intact.
3. Insurance encourages savings:
There are various products offered by life insurance companies that not only provide life cover but also provide a provision for wealth creation to achieve future goals. The requirement of periodic investment into such products encourage savings. For example, endowment plans, money back plans, unit-linked investment plans, etc.
The insurance covers uncertainties such as the risk of death, risk of getting hit, falling sick, and many more. Insurance is all about managing these risks effectively. Every insurance policy provides coverage against insured risk.
5. Insurance provides peace of mind:
As insurance manages risk effectively, you can only make regular payments towards insurance and stay tension-free. Peace of mind is what you get by insuring.
The Need For Insurance:- I don't need insurance. It's a brave refrain of the uninsured, one that glosses over the unpredictability of life, which stealthily and silently accompanies you at every step. Stop for a moment and ponder over some uncomfortable, yet necessary questions. What if an accident felled you? How will your loved ones maintain their current lifestyle and meet their financial goals? Or, what if a fire razed the house you so painstakingly built with money rammed into your precious set of wheels, and damaged it's beyond repair? What if........
Disasters don't usually announce their arrival. They strike unanticipated, often with dire consequences that scar your world and play havoc with your personal finances. You can take the greatest care in the world with all things precious, but you will never eliminate the possibility of harm befalling them. What you can do is mitigate the effect of such eventualities on your family's finances, especially if they are finely balanced, by buying insurance. Insurance, in the purest form, is a risk management tool, a security blanket. It provides you with financial protection against unexpected events. When you buy the insurance you effectively transfer a portion of your risk to your insurer. This protection comes at a price, but it's a fraction of what you might otherwise.
A Road-map for Insurance
Young 20s adult: Buy only Life Insurance if you have dependents. Buy Accident and Health insurance, requisite asset cover.
Young 30s family: Subtract existing assets from future expenses, and cover the difference. Extend Health insurance to family, continue accident, and asset covers.
Mature 40s family: Maintain cover to balance the shortfall in existing assets. Continue Health insurance, accident, and asset cover.
Empty 50s nesters: Maintain cover till you are earning. Top-up health cover for self and spouse, continue asset cover.
Retired and over 60s: No Life cover needed unless you have dependents. Continue Health insurance for self and spouse; continue assets cover.
1881 The British introduce Life insurance to India, with the establishment of the Oriental Life Insurance Company in Calcutta.
1870 Bombay Mutual Life Assurance Society is the first Indian-owned life insurer.
1912 The Indian Life Assurance Companies Act enacted to regulate the life insurance business.
1938 The Insurance Act, which forms the basis for most current insurance laws, replaces the earlier Act.
1956 Life insurance nationalized; government takes over 245 Indian and foreign insurers and provided societies.
1956 Government sets up LIC.
1993 Malhotra Committee, headed by former RBI governor R.N. Malhotra set up to draw up a blueprint for insurance sector reforms.
1994 Malhotra Committee recommends re-entry of private players, autonomy to PSU insurers.
1997 insurance regulator Irda (Insurance Regulatory and Development Authority) set up.
2000 IRDA starts giving licenses to private insurers; ICICI Prudential and HDFC Standard Life first private life insurers to sell policies.
2002 Banks allowed to sell insurance plans; as third-party administers enter the scene.
2004 Unit-Linked insurance plans (Ulips) emerge as a popular instrument for insurance and savings.
2005 Guidelines for Ulips issued by Irda.
2007 Ulips dominate incremental sales for all players in the sector with a large part of investments pumped into equities.
2008 Total players in the life insurance industry increase to 16.
Dec 4, 2020 — The insurance industry of India has 57 insurance companies, 24 are in the life insurance business, while 33 are non-life insurers. Among the life insurers.
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