What is insurance and how many types

In the current market, people are very careful about their lives, people are increasingly interested in insurance, many of them do not know what is insurance?

Many people have misconceptions about insurance , such as many people think that insurance is a type of investment scheme where money can be deposited for a specific period of time and the money can be withdrawn in the future with interest.

But this idea is completely wrong, remember that insurance is not a medium where you can deposit money and withdraw that money with interest after a certain period of time.

So in this article I will discuss insurance (Insurance) or what is insurance? How many types and what? List of insurance or insurance companies in Bangladesh.

What is insurance?

Insurance is a lump sum payment to an organization to protect itself against possible future losses. In return you can get help from that organization in case of loss.

Thus, when something unfortunate happens, the insurer helps you through the situation.

As I said before, this is not a medium where you can deposit money and withdraw it after a certain period of time, as is the case with fixed deposit, saving scheme, mutual fund.

That’s why common people misunderstand the difference between Insurance and Investment Scheme.

Remember that insurance will never pay you as a director.

Through insurance, you can get help (money) from them in exchange for various types of losses that may occur in the future.

Therefore, even if you do not get money directly through insurance, you can get help (money) from them (insurance company) in exchange for various types of losses that may occur in your future.

If you don’t understand yet, you can understand with examples.

Example: Suppose you have taken a “health insurance” from any health insurance company and according to the rules of that insurance company, you have given them 5 thousand dollers as premium every year.

But nothing will be given to you instead of that 5000 thousand dollers premium paid every year.

However, if in the future you have any health risk problem or you have to be hospitalized then the insurance company will bear all your medical expenses.

Hope you have understood what insurance is.

What are the types of insurance?

Insurance can be of many types, but general insurance is of 2 types:

Term Insurance or Life Insurance
General Insurance or Non-Life Insurance
The following figure shows the types of insurance –

General insurance is again divided into many parts, such as:

  • Home Insurance
  • Health Insurance
  • Vehicles Insurance
  • Travel Insurance
  • Corporate Insurance
  • Fire Insurance
  • Property Insurance
  • Accidental Insurance

Life Insurance:

Life insurance is a strategy to transfer or avoid human risk of death, loss, peril.

Where a person pays a regular premium to an insurance company with the intention of receiving a specified amount of money at a specified time in the future or after the person’s death.