Insurance as the name suggests is a safeguard from financial loss. It is an agreement between two parties; a company that provides insurance (insurer) and the person who needs insurance (insured). In this agreement, the insurance company legally promises to provide financial protection in the form of reimbursement in case of any loss such as accident, injury, death, theft, etc.
There are several types of insurance policies such as life, health, vehicle, property, etc. The common core components of an insurance policy are premium, policy limit, and age (in the case of life and health).
The most common types of insurance in India are:
- Life insurance
- Health insurance
- Car insurance
- Home insurance
- Education insurance
Tax benefits on insurance:
- A life insurance premium of up to ₹1.5 lakh can be claimed as a tax-saving deduction under Section 80C
- A medical insurance premium of up to ₹25,000 for yourself and your family and ₹25,000 for your parents can be claimed as a tax-saving deduction under Section 80D