Insurance is a legal agreement between a policyholder and an insurance company wherein the latter promises to compensate the former in the event of a loss. The covered event is contingent in nature as it may or may not occur. Thus, an insurance policy keeps the policyholder shielded against such contingent events which may result in a loss. In return for this promise, the insured is required to pay a premium to the insurance provider.

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.

Insurance can be broadly divided into two categories - life insurance and non-life/general insurance. Life insurance is further divided into various types of plans namely Term Plans, Unit-Linked Insurance Plans (ULIPs), Endowment Plans, Child Plans, Retirement Plans, Savings Plans, Personal Accident Cover, etc. All other types of insurance plans such as car insurance, bike insurance, health insurance, travel insurance, home insurance, fire insurance, marine insurance, etc come under the non-life/general insurance category.

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

Cashless claims:  Get in touch with your insurer and inform them about your claim. Depending on the type of insurance (motor/health), the insurer will guide you about the cashless claim settlement process. In case of motor insurance, the insurer shares the details of a nearby cashless workshop if available and you just have to pay your part of the liability to get your car/bike repaired. In case of health insurance, you can get in touch with your TPA (Third Party Administrator) help desk at the time of hospitalization for a cashless claim.

Reimbursement claim:In case of unavailability of a cashless facility, you need to make a reimbursement claim. In case of motor insurance, you need to pay the entire claim amount up front (after informing the insurer of the claim) and get it reimbursed from the insurer after the repair of your car/bike. In case of health insurance, you need to pay the entire bill amount to the hospital (after informing the insurer) and get it reimbursed from the insurer post discharge from hospital.

All life insurance plans qualify for a tax deduction of up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act. Also, the proceeds received under life insurance plans such as death benefit, maturity benefit, and accrued bonuses qualify for a tax exemption under Section 10(10D) of the Income Tax Act.

The premium paid for health insurance plans qualify for a tax deduction of up to Rs. 25,000 under Section 80D of the Income Tax Act. These plans also qualify for an additional Rs. 25,000 tax deduction for premium paid for parents’ mediclaim policy (Rs. 50,000 if parents are senior citizens).

IRDA (Insurance Regulatory and Development Authority) is the apex body overseeing the insurance sector in India. Its main aims are to protect the interests of policyholders and regulate the insurance industry.

Yes, Auto Insurance is mandatory in India. Having compulsory liability insurance is a statutory requirement of the Motor Vehicles Act, 1988. However, we recommend a comprehensive policy to limit your financial liability.