Insurance: the basics
Insurance is a contract: you pay a premium, and the insurer pays if a specific loss happens — a death, a hospital bill, a damaged car. It is protection, not an investment. The two questions are: what am I protecting against, and will the claim be paid when it matters?
This page explains how things work. It is not a recommendation to buy, sell or hold any product. We do not sell or distribute any product and take no commission.
The main types and what each is for
- Term life insurance — pays a lump sum to your family if you die during the term. The cheapest way to protect people who depend on your income. No payout if you survive the term.
- Health insurance — pays hospital bills up to the sum insured. Family floater plans cover several people under one sum. Waiting periods apply for existing conditions and some treatments.
- Motor insurance — third-party cover (damage you cause to others) is compulsory by law for every vehicle on the road; comprehensive cover adds damage to your own vehicle and theft.
- Home and property insurance — fire, flood, burglary, and for a home loan, the lender may require it.
- Personal accident — pays for death or disability from an accident.
- Endowment, ULIP and other savings-linked policies — combine insurance with saving or investment. Costlier and more complex; compare with buying term cover and saving separately.
Words you will meet
- Sum insured / sum assured — the maximum the insurer pays.
- Premium — what you pay, yearly or monthly.
- Waiting period — time after buying before certain claims are allowed.
- Exclusions — what the policy does not cover. Read this section first.
- Deductible / co-pay — the share of a claim you pay yourself.
- Free-look period — a short window after receiving the policy in which you can return it for a refund. Check the current period in the policy document.
- Claim settlement ratio — the share of claims an insurer paid; published by IRDAI and insurers.
Before you buy
- Check the insurer and the agent or broker are registered with IRDAI — irdai.gov.in lists insurers, and every agent has an IRDAI licence number.
- Fill the proposal form yourself and truthfully — health, habits, existing policies. A wrong or missing answer is the commonest reason claims are refused.
- Read the exclusions and waiting periods before paying.
- Pay the premium to the insurer, never to an individual’s account. Get the policy document and keep it with your nominee’s details updated.
- Tell your family what policies exist and where the papers are.
Questions about insurance
How much life cover do I need?
A common starting point is a multiple of your yearly income plus outstanding loans, minus existing savings. A registered adviser can help you refine it; we can explain the idea, not give you a number.
Is a policy from my bank better?
Banks distribute policies as agents. Compare the same way as any other policy; you are not obliged to buy where you bank.
Why was a claim refused?
Most often: non-disclosure on the proposal form, a waiting period not over, an exclusion, or a lapsed premium. Ask for the reason in writing.
Where do I complain?
First to the insurer’s grievance cell. If unresolved, to the Insurance Ombudsman for your area, or through IRDAI’s Bima Bharosa portal.
Can I have more than one health policy?
Yes. Claims can be split between them; inform each insurer of the other.
Does a home loan require insurance?
Lenders usually require property insurance and often suggest a loan-cover life policy; you can usually choose the insurer.
Does Orange Fincorp sell insurance?
No. We do not solicit, quote or sell insurance, and we take no commission. We explain how it works.
Have a general question? Ask us on the Contact page.
