Layman’s Guide to Understand Insurance Policies

As a woman, safety is our first priority. We make sure that our money is safe, our children are safe, and that our future is secure. Insurance too, is all about safety and security. In this blog, we’ll take you through understanding insurance policies and cover all that you should know about insurance.

Understanding insurance and what is its purpose?

Insurance is a plan that provides protection against the risk of loss. It offers financial compensation in case a specific loss occurs. The purpose of Insurance is to lower financial risk in the event of an uncertainty.

For example – Rita is involved in a car accident. She has suffered some injuries and needs treatment immediately. However, her medical bills are expensive and she doesn’t have enough savings to pay for them. Thankfully, Rita has health insurance coverage that will help her in covering the costs of her treatment and she can recover from her injuries stress-free.

Why is Insurance important for women?

According to LXME’s Women and Money Power Survey 2022, 58% of women had no insurance (health or life) in their name. However, there exists a huge need for women to have insurance.

 Longer Life –

Women live longer than men and as a result, will require care for longer. Insurance for expenses related to hospitalization, nurse facilities, etc. is important to ensure that a woman can have a long, happy life.

Health Problems  –

There are many health risks that only apply to women at different life stages like pregnancy, childbirth, breast, and cervical cancer, etc. Insurance can help cover costs related to these unique health needs.

Financial Independence –

Insurance can give a woman financial stability in difficult times. It will allow her to have the resources to face any situation, without needing help from anyone else.

Which Insurance should you buy?

There are two types of insurance plan which every woman must-have: Life Insurance and Health Insurance

1. Life Insurance –

Life Insurance provides financial protection to the policyholder’s beneficiaries (people the policyholder has chosen ex. children, husband, wife) in the event of their death. It is meant to give financial security to the policyholder’s family and help them cope in case the policyholder passes away.

For example – Jaya is a 35 year old mother with two children. She is the sole earner of the family and she wants to protect her children’s future in case she passes away. To do this, she has purchased a term insurance policy that will take care of her children’s needs in the event something happens to her.    

Ideally, one should buy pure life insurance such as term insurance. It costs less and you can add riders as required. (Riders offer policyholders the flexibility to modify their insurance coverage according to their needs). One should not mix their insurance and investment.

2. Health Insurance –

Health insurance is a type of general insurance that covers the medical expenses of the insured individual. It offers security and reduces the burden of high healthcare expenses. You can also add riders to your insurance that will allow you to modify your health cover to your requirements.

For example – Richa is a 24 year old IT employee. She wants to secure her financial future. To do this, she decides to purchase Health Insurance and protect herself for any big healthcare bills that may come up in her life.

What are the benefits of Insurance

Financial Security –

Insurance provides safety from financial losses and unexpected events such as diseases, death, accidents etc. It ensures that you don’t face a huge loss in case an unfortunate event happens.

Risk Management –

Insurance transfers the risk of an uncertain event to the insurance company. In case the event occurs, the individual is protected against the risk and any loss can be managed.

Protection of Assets –

Life Insurance can protect your assets and ensure that your family is financially secure in the event of your death. In this case, insurance can cover expenses for education, healthcare, loan-repayments etc. and this will help prevent selling of assets to fund your expenses.

To sum up, this blog gives you an insight into how to understand insurance policy and how insurance serves as a safety net from uncertain events in life. Understanding the various types of insurance coverage and purchasing policies for your needs should be critical for every woman. After all, insurance provides us with the security and confidence to live life knowing that we are protected from risk.

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