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What Is Insurance?

Insurance is a contract which is presented as a policy to be used as a risk management tool to ensure financial protection at the time of crisis. Insurance helps an individual to ensure financial protection against losses that may arise during an unforeseen event.

An insurance policy is a contract between an individual (policyholder) and an insurance company (Insurance provider), under which, the individual makes regular payments known as premiums to the insurance company which in return pays the sum assured in case an unforeseen event such as demise of the policyholder, accident, damage to the vehicles or other possessions.

Why is insurance important?

Unfortunate events like accidents, illnesses, and natural disasters come without any warning and thus it is necessary for you to keep yourself and your loved ones shielded against such unforeseen happenings. One of the best and simplest ways of keeping yourself secured against these contingent events which may cause a financial loss is buying an insurance policy.

How Does Insurance Work?

As mentioned earlier, insurance is a legal contract between the policyholder and the insurance provider. The insurance policy carries all the details about the aspects and conditions under which the insurance provider will pay out the insurance amount to the policyholder or their nominee in case an unforeseen event occurs. Insurance is a financial tool which helps in ensuring financial protection of yourself and your family. Generally the person who has purchased the policy also known as policyholder has to pay premiums for the coverage available under the insurance policy. Any person can seek insurance from an insurance company.

What are the types of insurance

There are several types of insurance available in India. The four most common types of insurance bought in India are as mentioned below:

Motor Insurance: Motor insurance policy is a type of insurance policy that provides financial assistance in the event of an accident or mishap involving your vehicle. Motor insurance can be purchased for three categories of vehicles which are personally owned four wheeler, personally owned two wheeler (bikes and scooters) and commercial vehicles. There are three types of motor insurance available in India which are Third party Liability Cover, Comprehensive Cover and Stand Alone Own-Damage cover. According to a person’s coverage requirement for their vehicle, they can choose a motor insurance that fulfills their requirements. Third party motor insurance policy is mandatory in India for all vehicles, as per the Motor Vehicles Act.

Health Insurance: Health insurance policies provide financial assistance to the policyholder in case they need to be admitted to the hospital for any kind of treatment. Additionally, some health insurance plans also cover the cost of treatment which are undertaken at home before the hospitalization or after discharge. There are several health insurance plans available in India such as Individual Health Insurance, Family Floater Plans, Critical Illness Cover, Senior Citizen Health Insurance, Group Health Insurance, Maternity Health Insurance and Personal Accident Insurance.

Life Insurance: Life insurance is an agreement between an individual and an insurance company under which the insurance company promises to provide a sum assured (death benefit) to the family of the life assured in the event of an unforeseen death of the life assured. In case of no death, a sum assured known as the maturity benefit is provided to the life assured at the time of maturity of the policy under selective life insurance plans. There are 6 types of life insurance policies available in India which are Term Life Insurance, Unit-Linked Insurance Plan (ULIPs), Child Protection Plan, Money Back Plans, Retirement Plans and Endowment Plans.

How to make a claim in insurance?

There are two ways in which you can make a claim:

How four insurers pooled N130.6 billion gross premium

Despite worries about the harsh business environment, four underwriting firms were able to pool about N130.62 billion in gross written premium (GWP) out of total gross premium revenue of N630.4 billion generated by the industry in 2021, The Guardian has gathered. The operators attributed the performance to growth across all lines of business in the market, even as stakeholders believe that one of the ways to drive industry penetration is through increased financial capacity of the players.

The four underwriting firms are AllCO Insurance Plc, AXA Mansard Insurance Plc, Sovereign Trust Insurance Plc and Guinea Insurance Plc. The breakdowns of their premiums showed that AllCO Insurance Plc generated N71.6 billion, AXA Mansard Insurance (N44.97 billion), Sovereign Trust Insurance Plc (N12.7 billion) and Guinea Insurance (N1.35 billion).

Speaking on the performance, the Managing Director and Chief Executive Officer, AIICO insurance, Babatunde Fajemirokun, said: “Our half-year results are a testament to the resilience of our business model”.