Why should you buy insurance in the context of Nepal?

An insurance policy/plan is a contact between an individual (Policyholder) and an insurance company (Provider). Under the contract, you pay regular amounts of money (as premiums) to the insurer, and they pay you the sum assured if an unfortunate event arises. For example, untimely demise of the life insured, an accident, or damage to an insured house. Let’s know more about what insurance is and what are the various benefits, features & types of insurance available in India 

• Insurance as a financial backup at the time of emergency 

Insurance provides financial protection against unexpected events such as accidents, illness, and natural disasters. 

• Insurance as an investment 

If you don’t know, insurance is one of the means of investment. With insurance you can invest and get back your investment with the added benefit of securing your life from financial loss. In addition to coverage of risks, insurance also acts as force savings/investment. For that you need to purchase life insurance (endowment, whole life) 

• Mandatory Requirement 

In Nepal, Insurance is mandatory by the government, banks and others. Like, Property insurance - while taking loan, agriculture insurance - while taking loan. Credit life insurance - while taking loans especially from MFIs and Cooperatives. Likewise, the government has made it mandatory for Third Party Insurance. Same like for aviation and marine sector it is mandatory and fully needed. 

• Insurance as a tool for tax exemption 

Buying an insurance package is also another way to get away from heavy tax duty. One is liable for an exemption if s/he buys life insurance up to Rs 40,000 a year. This will lower the taxable amount and tax liability. This also becomes savings in the long run. The government also offers an exemption of up to Rs 20,000 if the person buys health insurance. The government also exempts Rs 5,000 from the taxable income if a person also has house insurance in their name. 

• Insurance for securing the coverage of your and loved one’s health   

Insurance provides a secure health benefit of paying medical bills and other charges in case you and your loved ones are hospitalized. 

Posted By Sunny Gauro