Insurance can be tricky to figure out with all the rules and technicalities. The important concept is that it’s something you need and not having it may be devastating to you and your family.

Breaking the Myths About Insurance

As per Mr. Sushil Bajracharya, CEO of Himalayan General Insurance Co. Ltd, Babar Mahal, the general public still finds it difficult to properly distinguish between the products and services offered by life and non-life insurance companies. Particularly, there seems to be a huge knowledge gap between insurance stakeholders. Here are some of the distinguishable feature for you to consider between life and non- life insurance before purchasing one of these policies

Life Insurance

Non-Life Insurance

Your risk will be covered, along with saving component with your premium amount, plus bonus in your pocket on the maturity of your insurance.

Your risk element will be covered without the saving element.

You have to make periodic payments either monthly or quarterly or semi-annually or annually.

You have to pay premium just once since the coverage period for most of the non-life insurance policies and plans are one year or less

You have to pay fixed premium that is applicable throughout the period.

Your premium may usually increase at the time of renewal of policy.

Your risk of premature death, income during retirement and illness are covered by life insurance.

Your risk of property loss, liability arising from damage caused by an individual to a third party, and accidental death or injury are covered by this insurance.

This policy gives out a certain amount to you (insured) upon maturity or your nominated beneficiaries upon your death

This policy basically protects an individual against losses and damages caused to physical property and health only.

Your life has no monetary limit. So you can claim more than the assured amount.

You can claim only the actual amount of loss-subject to a maximum of sum assured.

You can claim on maturity or on the occurrence of unforeseen event, whichever comes earlier.

You can claim only on the occurrence of particular events.

There is certainty of occurrence of event i.e maturity of your policy or death

There is no certainty for occurrence of event.

Your life insurance expires in the case of a lapse of maturity of your policy or with your death

Your insurance expires on the anniversary of policy and subject to annual renew for continual financial protection

You can insure your whole life or choose endowment policy or term policy under life insurance.

Under this policy, you can have motor insurance, fire/house owners’/householders insurance, personal accident insurance, medical and health insurance and travel insurance.

It is not the insurance company which imposed vague rules and regulations, they are simply trying to implement the guiding principles.

Now the guiding principles to break the myths of insurance

Principles of Utmost Good Faith

You are required to disclose all relevant information with a high degree of honesty on the application form about yourself or whatever you are insuring. Misrepresentation and concealment of fact may lead to void of contract between insured and the insurer.

Principle of Insurable Interest

What you insure must be of financial interest to you. Not your neighbors, not your friend, or just another random stranger, but just you. Without insurable interest, an insured can destroy the property or kill the life just for the sake of it.

Principle of Indemnity

As per this principle, you have the right to get reasonable financial compensation but not more than the loss amount. And you as an insured is obliged to pay the amount either equal to or less than actual loss.

Principle of Subrogation

To be specific, even if the property is insured with two insurers, the amount of your actual loss is shared by two insurers and total compensation given to you doesn’t exceed the actual loss.