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on August 16, 2025

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Types of Life Insurance

on August 14, 2025

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Motor (Auto) Insurance: A Complete Guide

on August 10, 2025

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Basics of Term Insurance

on August 10, 2025

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Motor (Auto) Insurance: A Complete Guide

1. What is Motor / Auto Insurance? Motor or auto insurance is a financial agreement between a vehicle owner and an insurance provider, designed to protect against losses arising from accidents, theft, or other damage involving the insured vehicle. In exchange for a regular premium, the insurer agrees to cover certain costs associated with repair, replacement, or liability, depending on the policy terms. Motor insurance applies to cars, motorcycles, trucks, and other road vehicles. It ensures that both the owner’s interests and those of third parties affected by an incident are financially safeguarded. Example: Imagine your car gets damaged in a hailstorm. Without insurance, you would bear the full repair cost. But if you had a comprehensive motor insurance policy, the insurer would cover the expenses, sparing you a hefty bill. 2. Types of Coverages in Motor / Auto Insurance a) Third-Party Liability Coverage: This is the most basic form of motor insurance and is manda...

What is Reinsurance? Reinsurance is insurance for insurance companies. It is a contractual arrangement where one insurance company (the “ceding company”) transfers part of its risk portfolio to another insurance company (the “reinsurer”). By doing so, the insurer protects itself from taking on too much risk from large claims or catastrophic events. For example: If an insurer issues a property policy with coverage worth 100 million, it may only want to retain 20 million of that risk. The remaining 80 million can be transferred to a reinsurer. This way, if a disaster strikes, the insurer is not overwhelmed financially. Why is Reinsurance Needed? Reinsurance plays a critical role in stabilizing the insurance industry and protecting policyholders. Key reasons include: Risk Management : Helps insurers avoid insolvency by spreading large risks across multiple entities. Capacity Expansion : Allows insurers to underwrite policies with higher limits than they could on t...

Basics of Term Insurance

Term Insurance Term life insurance provides coverage for a fixed duration, for example, 10, 20, or 30 years. If the insured person passes away during that time, a lump sum is paid to the beneficiaries. If the term ends without a claim, the policy simply expires. Its characteristics are: It is purely for protection, without any investment or savings element. Premiums are typically fixed for the entire term. The coverage duration is chosen based on personal needs and obligations. There is no payout if you survive the policy term. Example: Joe is a 30-year-old with a 20-year term policy of 1 million. If Joe passes away at age 45, his family gets 1 million, tax-free. If he lives beyond age 50, the policy simply ends, just like his car insurance does when the year ends without a claim. Term vs. Whole Life vs. Investment-Linked Insurance Term: Premiums are the lowest among all life insurance types because there is no savings or investment element. It is d...

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