Insurance Industry in IndiaFinance » Insurance
The insurance industry in India has shown significant growth in the past few decades. It has grown to a whopping 41 million US dollars and has shown a growth of about 70 percent in terms of new premium. According to recent surveys, the insurance companies in the country earned about 7 million dollars within the month of April to August, 2009 and this amount jumped to about 12 million dollars in the next year. The growth of these companies can be attributed to the increasing awareness which led to an increase in demand and an array of innovative products that are offered by them.
If you look at the risks that you are exposed to in your daily life, you might be surprised. However, it may surprise you even more that most of these risks can be covered by the insurance companies under general and life insurance. However, in India there is lack of awareness level about the kinds of products available to people, inspite of the huge growth of this in this industry. This is one of the main reason why people do not cover themselves even if they can afford to buy a policy.
People see insurance as a means to protect their family against the unforeseen incidents like the death of an earning family member. However, there are other things that are covered in insurance and it has benefits for people in several ways. Some of them are as follows:
- Financial Security: If you plan to buy a life insurance policy then in a way, you buy financial security for your family. If you are the sole earning member of your family, your family would be provided with the complete amount assures in in case of death before the policy matures. This would provide your family with at least the financial security that you might have wished to. Even if you do not die, you end up saving your money and it gets accumulated and provides you with the much needed financial security at a time you plan to retire.
- Risk Transfer: Insurance is an effective management tool; this holds good for both life insurance and general insurance. You can bank on an insurance company to provide you with compensation in case of unfortunate incidents. Apart form covering your life, you can cover the risk involved in your property, the contents of the property; physical damage to commercial property, and the various machines and equipment that are part of your office. You can also buy a policy that covers risks against theft and provides you coverage in case of natural and man made calamity. In case you happen to fall sick and need urgent medical attention, your insurer can cover all your medical expenses if you have a health insurance policy.
- Reduces Dependency: If you invest in pension plans as soon as you start working, you would have accumulated a sufficient amount of money at the time you retire. This would reduce your dependency on your children or your spouse. You can even plan to invest in such a manner so that the expenses like child's education and daughter's wedding are easily managed without leaving a heavy burden on you when you need it.
- Safe Mode of Investment: Life insurance is considered to be one of the safest mode of investment, especially those who are neither market savvy not want to take risks with their hard earned money. Many people who are not willing to invest their money in stocks and share market because of its uncertainty, look at life insurance policy as a mode of investment. Their money increases to a significant amount when a life insurance policy matures.
- Encourages Saving: As a life insurance policy requires you keep aside a part of your money aside for paying your premiums which can be paid on monthly, quarterly, half yearly or even yearly basis. If you buy a general insurance, you need to keep aside some amount of money for the purpose of paying for your insurance policy which provides with coverage of various kinds of risks. If you do not pay your premiums on time, then you would be charged fine to continue your policy. This encourages the habit of saving in the long run.
- Tax Free Investment: The returns that you get as a result of investing in any insurance policy has tax redemption in India. So when your insurer returns the amount assured with benefits, you do not have to pay any tax for it. So this is one of the best ways to save tax if you plan to invest in the long run.
Buying an insurance policy has several advantages. However, you should be very careful when you buy a policy and should read the terms and conditions and the limitations of a policy that you plan to buy. Also check if a company charges you extra amount of premium or has competitive rates. The competition in the market has increased over the past few decades with the increase in vendors who offer their services. This competition has also given rise to several innovative products in the market and the consumer is left with an array of choices. So if you decide to spend your money on an insurance policy, you should know some basics of insurance policy that is explained in the inner pages of this site.