Insurance

Insurance is a sort of aid that comes handy for the individual insured in situations where the individual effectively shares the risk of an unforeseen financial loss with a company providing the insurance. The insurer concerned obtains a certain amount of money as premium from the insured continually over a time period and in return mollifies the monetary loss of the person concerned during times of distress. The bond between the insurer and the insured is known as an insurance policy which consists of all the terms and conditions and the probable situations under which the person insured shall be provided with financial reimbursement. When the policyholder suffers a loss which is covered under the insurance policy, he can claim for the monetary compensation.
Insurance policies are classified basing upon the risks that they compensate. The prominent out of the bunch are auto insurance, health insurance, life insurance, property insurance, income protection insurance etc. All these insurance policies have separate and distinct terms and conditions as per the risks. The insurance companies function on the ethic of pooling an amount by obtaining separate payments from multiple insured individuals as premiums and using that money to compensate for the loss of the few that may occur. Insurance had its inception long back in 2nd Millennium BC practiced by the Chinese and Babylonian traders and has grown up to be more refined and practical in the modern era.
The adverse social effects of insurance include an increment in fraudulence for monetary benefits which indirectly leads to an increase in potential losses. The Income Tax Regulatory and Development Authority, a department of the Indian Govt. specifically monitors and deals with all the issues in the insurance sector. Insurance has grown up to be one of the most adopted practices in today's world, but it should be kept in mind that being insured does not diminish the chances of risk in any way.