In the month of April, Bulls and Bears organized a nationwide competition for articles and this blog series features the top three winners of the competition. The blog is written solely by the participant and edited by Team Bulls and Bears. Happy learning!
Merchant marine men and traders often hung out in coffee shops in the business district of London, and while drinking coffee, the idea of modern-day insurance was born. Lloyds of London is the heart of worldwide insurance. Perils twelve clauses come from the ocean marine cargo policy originated by members of Lloyd's coffee house which states - "Touching the adventures and perils which we the assurers are contented to bear and do take upon us in this voyage: they are of the seas, men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, surprisals, takings at sea, arrests, restraints, and detainments of all kings, princes, and people, of what nation, condition, or quality so ever, barratry of the master and mariners, and of all other perils, losses, and misfortunes, that have or shall come to the hurt, detriment, or damage of the said goods and merchandises, and ship, etc., or any part thereof." Meaning, as you are sailing through life, you will occasionally encounter rough seasons, rovers, and assailants on your journey; but if you've taken the time to create a solid and durable insurance policy, you will survive the storm.
What is insurance? Insurance is a legal agreement between you and the insurance company where the company offers to fund covered claims as they arise, in exchange for monthly payments from you. A policy has different coverages like damage to property and vehicles, medical bills, or even premature death. It protects you and your family during financial emergencies. Life is unpredictable and it can surprise you when you expect them the least. It is essential to be completely prepared to cope up with life's unexpected events.
Insurance is not just a way to save money, but it also has several other advantages. Insurance helps pay for medical emergencies, hospitalization, recovery, and medical care. It compensates for the financial loss incurred by the family in case of the sudden death of the earning member. It offers financial assistance and mitigates the risks that people and companies face throughout their lives. It is an excellent risk-mitigation tool against incidents that might put individuals or companies in financial jeopardy.
Along with the standard coverage, many insurance policies have savings and investment options. This aid helps in the accumulation of saving for the future by making daily investments. You are required to pay premiums regularly where the majority of the money goes towards life insurance and the rest goes towards either a savings or an investment plan, depending on your requirements. Insurance ensures risk control in life. Like, travel insurance saves your money when your flight is delayed or canceled, vehicle insurance saves your money by paying for damages endured by your vehicles or its legal fees, home insurance saves your money by paying for property damage. Apart from personal benefits, it also helps in economic growth as it invests in projects such as water supply, electricity, and highways. In addition to attracting foreign direct investments, paying taxes on profits gained, and investing in the stock market, insurance contributes to economic development in numerous ways.
Uncertainty is life's greatest foe, and insurance helps you to prepare for it. There couldn’t be a better time than now, to understand the importance of insurance. Not only is the pandemic a health emergency, but it is also a financially difficult time for everyone in our country. Your entire life savings can disappear just because of one incurable disease. A ten to fifteen-day treatment can cost up to three lakhs per person. Imagine a family of four having just one earning member, with unsteady income and increased expenditure. Can you imagine what they will go through even if one of them catches the deadly virus? In such crucial times, only insurance can help you financially. The premium you pay for health care also offers tax benefits by lowering your annual taxable revenue and, as a result, reducing your tax liability for that financial year. It saves your money in the event of unexpected circumstances and helps you by lowering the long-term costs.
You can stop paying out of your pocket for things like medical bills, property or vehicle damage, or other misfortunes. It is also a fantastic tax-saving tool that will help you lower your tax bill. Whether it is life insurance, term insurance, health insurance, travel insurance, or auto insurance, everyone should be aware of the value of insurance. Instead of looking at the larger picture, people keep fixating on how much money they need to spend in advance for an insurance product, but they don't realize the real benefits of insurance. So, if you believe you need insurance, and the policy provides the benefits you need at an affordable premium, go ahead and invest before you break your leg or burn down your comic book store to the ground!
Written by- Raahi Rai, Pandit Deendayal Energy University
Edited by- Riya Shah, Pandit Deendayal Energy University
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