The unpredictable nature of life means that one day you are fine, the next you have an accident, an illness or you lose your job or have an emergency that empties all your savings. This is precisely the purpose of insurance – to cover you, your family and your money.

Yet, most Indians either do not understand insurance completely or purchase insurance without knowing what they need. Ever wondered:

• What is insurance?
• How does it work?
• What Insurance policy should I consider to buy?
• How much insurance coverage is enough for me?
• How do I choose the right Insurance plan for me?

“then this guide is made for you”.

With platforms such as CreditMitra helping you compare and select the right insurance policies for you, let’s make insurance simple, so you can make informed decisions.

What Is Insurance?

Insurance is a safety net in case of a financial crisis. In exchange for a small fee (called premium), an insurance company will promise you to protect you against certain risks.

For example:

• If you fall sick – hospital bills are paid by health insurance
• If something happens to you – life insurance your family
• If your car gets damaged – motor insurance will pay for repairs
• If your phone gets stolen – gadget insurance pays you

How Does Insurance Work?

It’s simple:

• You buy an insurance policy.
• You pay a premium at the end of the month or annually.
• When some unfortunate event occurs you raise a claim.
• The insurance company compensates you for the loss specified in your policy.

Insurance is a way of giving the financial risk from you to the insurance company.

Why Do You Need Insurance?

Here are the main reasons:

1. Protects Your Savings

In case of an emergency, it takes away your savings without insurance.

Insurance makes sure that your bank balance is safe.

2. Supports Your Family

Life insurance provides the peace of mind that your loved ones will be financially secure even if you are not around.

3. Helps in Medical Emergency

Hospital bills nowadays run into lakhs.

Health insurance helps to avoid financial stress.

4. Legal Requirement

Motor insurance is compulsory in India.

Travel insurance is required in many countries.

5. Peace of Mind

You sleep well knowing that you’re financially secure.

Types of Insurance Policy in India

There are various types of insurance and here are some of the most important ones every Indian should know.

1. Life Insurance

Life insurance is a form of insurance that pays the money to your family, if anything happens to you.

It provides them with the ability to manage expenses like:

• Monthly bills
• Education
• Loans
• Future goals

Popular Types of Life Insurance Are:

Term Insurance (Highest Recommended)

• Cheapest
• Highest coverage
• Pure protection
• Suitable for all those who have dependents

For example: For 500-800/month premium paid, you can get 1 crore coverage.

Endowment Plans

• Insurance + savings
• Low-risk, low return
• Applicable for Conservative savers

ULIPs

• Insurance + Market linked investment
• Medium to high risk
• Good for long-term goals

Whole Life Insurance

• Covers you for the whole of your life
• Has maturity benefits

2. Health Insurance

Health Insurance covers your medical costs (such as):

• Hospitalization
• Surgeries
• Medicines
• ICU
• Ambulance
• Tests

Medical costs are rising up and even for a 3-day hospitalisation can cost 50,000 – 3,00,000.

Types of Health Insurance:

• Individual health plan
• Family floater plan
• Senior citizen plan
• Critical illness plan
• Top-up and super top-up

Every person should have some form of basic health insurance policy-even if your company already provides them with one.

3. Motor Insurance

Mandatory to be fitted in all vehicles in India.

Two Types:

• Third party insurance (mandatory)
• Comprehensive insurance

All insurance covers:

• Accidents
• Theft
• Damage
• Natural disasters

4. Travel Insurance

Covers you during trips for:

• Medical emergencies
• Flight delays
• Lost luggage
• Passport loss

Many countries require travel insurance in order to obtain a visa.

5. Home Insurance

Protects your house against:

• Fire
• Theft
• Natural disasters
• Accidental damage
• Ideal for homeowners.

6. Gadget & Mobile Insurance

Covers:

• Screen damage
• Theft
• Water damage

Useful for an expensive smartphone.

7. Personal Accident Insurance

Provides financial support in the event of accidents, disability or injury.

Terms you should know (Insurance Glossary).

Insurance can be complex with some of the terms. The most important ones should be explained simply here:

1. Premium

The amount that you pay for your policy on a monthly or yearly basis.

2. Sum Assured

How much the company will pay your family if something bad happens to you.

Example: 50 lakh, 1 crore.

3. Coverage

What all does the policy insure you against?

4. Exclusions

What the policy does not contain.

Always read this carefully.

5. Maturity Benefit

The money you receive at the end of the time of the policy.

6. Claim Settlement Ratio

Percentage of claims the insurance company settles. More the higher = better and trustworthy.

7. Waiting Period (Health Insurance)

The time before certain diseases are covered.

8. Cashless Treatment

The insurer pays hospital bills directly – no cash is required.

The Art of picking the right insurance policy.

Here’s a 5 steps guide:

Step 1: Identify Your Needs

• Family protection? – Term insurance
• Medical safety? – Health insurance
• Car or bike? – Motor insurance

Step 2: Check the Coverage

The policy must cover:

• Major illnesses
• Accidents
• Hospitalization
• Add-ons you need

Step 3: Compare Plans

Don’t buy the first plan that you see.

Compare:

• Premium
• Benefits
• Claim settlement ratio
• Network hospitals

Platforms such as CreditMitra help you to bounty comparative multiple insurers on a single place.

Step 4: Avoid the Cheapest Plan

Cheapest plans often have:

• Lower benefits
• Hidden conditions
• Fewer hospitals
• High exclusions

Always find a balance between affordability and quality.

 Step 5: Read Exclusions

This is where most people make mistakes.

 Knowing what’s NOT covered prevents claim rejection.

How to Purchase Insurance Easily on CreditMitra

CreditMitra makes insurance purchasing easy, quick and completely digital.

1. Choose the type of insurance

Life, health, motor, or personal accident.

2. Compare plans

View:

• Coverage
• Premiums
• Benefits
• Add-ons
• Claim ratios

3. Receive personalised recommendations.

Based on your:

• Age
• Income
• Family size
• Budget
• Goals

4. Complete KYC digitally

• Aadhaar Card / PAN Upload Basic information.
• Purchase instantly
• Your policy document comes within a few minutes.
• Track your policy

Renewals, claims, and support – all in the app.

Common Insurance Mistakes Committed by Indians

Omit these in order to save yourself:

•  Buying insurance on the sole purpose of saving tax
•  Thinking company health insurance is sufficient
•   Selecting low coverage in order to lower premiums
•   Not reading exclusions
•   Purchasing after a health problem develops
•   Not getting term insurance in time
•   Depending on agents, instead of comparing

Real Life Example (Why Insurance is Important)

1. Emergency Medical Case

Rohit did not have any health insurance.

A surprise surgery cost him 2.3 lakh which wiped off his savings.

His friend Sameer had a 5 lakh health insurance policy, so he paid zero from his pocket.

2. Breadwinner Loss

A 32 year old IT employee suddenly passed away.

He had no term insurance.

His family was poor financially.

With a simple 1 crore term plan of 700/month his family would have been secured.

3. Car Accident

A minor crash cost 45,000 in repairs.

Comprehensive motor insurance would cover the whole.

These examples illustrate why insurance is not an option, but a necessity.

Final thoughts:

In a world where more and more uncertainties are growing day by day, Insurance is your best financial defence. It helps to protect your health, wealth, assets and family future.

You have the right insurance plans whether you are starting your first job or you have a family, the proper insurance policies also have peace and monetary confidence.

With CreditMitra, you get:

• The right policy recommendations
• Transparent comparison
• 100% digital purchase
• Zero paperwork
• Fast support
• Hassle-free claims guidance

If wealth building is important, wealth protection is just as important and that begins with insurance.