Insurance | Meaning and Definition

Meaning and definition of insurance

Insurance simply means anything that provides protection against a possible eventuality.

Insurance is a settlement or arrangement by which a State or a company undertakes to provide the insured with compensation for a possible eventuality such as damage, illness, loss, or even death in return for the sum payment of a given premium.

 

What is insurance?/What is the meaning of insurance?

Insurance’s meaning is simple as is depicted by the name, which happens to be a safeguard measure from any sort of financial loss. Insurance usually stands for the agreement between two parties: the Insurer (the company providing the insurance) and the Insured (the individual who is in need of the insurance). In the agreement of insurance, the company/insurer makes a legal promise to provide the insured with financial protection in terms of reimbursement to support the insured in any case during losses, namely injury, theft, accident, or even death.

Insurance comes in several types based on the type of insurance policy which may be health insurance, property insurance, life insurance, vehicle insurance, and others. However, in all the insurance policies, the major core components include policy limit, age, and premium.

Types of Insurance policies provided in India

  •  Car insurance
  •  Education insurance
  •  Life insurance
  •  Health insurance
  •  Home insurance

What are the tax benefits related to insurance?

  • Under Section 80C, a life insurance premium can be claimed as a deduction for tax savings.
  • A medical insurance premium can be claimed for an individual or his/her family as well as parents, which under Section 80D can also be used as a deduction for tax savings.