Insurance

Human life and properties are always exposed to risk and uncertainties. It may cause great loss to human beings. Nobody knows earlier when a loss occurs from those risk and uncertainties. Risk cannot be completely eliminated but there is a device to cover the loss of the financial risk, which is known as insurance. Insurance can be defined as the act of providing indemnity or coverage against harm, as per the contract. Insurance coverage refers to the legal and financial protection against potential future harm. It protects from the risk of person and business.

Insurance has become an essential tool to manage the risks of an individual and the corporations. Insurance is an economic institution that allows the transfer of financial risk from an individual to a group by the means of a two-party contract. Insurance is a legal contract that protects people from the financial losses. It is a contract between the insurer and insured in which the insurer promises to pay the financial loss to the insured.

On Aswin 8^th 2004 B.S., the first insurance company in Nepal was established as Nepal Maal Chalani Tatha Bitta Company Limited. The National Insurance Agency Act 2025 was issued and Rastriya Beema Sansthan was established on Poush 1^st 2025 B.S. They deal with both kinds of insurance i.e. life and non-life insurance. At present, 25 insurance companies are currently functioning in Nepal. Nine of them work on life insurance and 16 work on non-life insurance. Insurance-related activities are supervised by the committee formed under the 2049 Insurance Act.

The National Insurance Corporation has played an important role in promoting insurance business, development, and expansion. It represents 25% of all non-life insurance in the market and 50% of all life insurance.

Life Insurance

Our life is uncertain, and there may be a variety of accidents and death. A sudden death in the family can lead to the economic crisis of the family. Therefore, each person should insure themselves against the risks to provide financial security. This kind of insurance is called life insurance. Insurance Act, 2049 is defines life insurance as: "Life insurance business involves drafting a contract so that a certain amount paid by a person or the person's heir so that a certain amount will be given in return."

Non-Life Insurance

Home, shop, industries, agriculture, etc. can get damage due to natural or other disasters. Non-life insurance protects the individual or business from such damages. These insurances cover a wide range of disasters including flood, earthquake, landslides, wind, hail, snow, drought, etc. as well as fire, accidents, crashes, etc. These are generally done for a period of one year and renewed annually. The agriculture ministry of Nepal issued the Crops and Processing Insurance Act, 2069 B.S. which insures the crops with 75% paid by the government and 25% by the farmer.

Important things to note before getting insurance:

1. The purpose of insurance should be clear.
2. The heir for the insurance should be mentioned clearly.
3. Incorrect details, information or notices should not be given.
4. The specified amount equivalent to the cost of insurance, and interest can be paid or not should be taken into account.
5. The insurance proposal should be read carefully, and must be satisfactory.
6. The insurance company should be licensed by the government.
7. The interest amount of insurance should be billed and a copy taken every time for safekeeping.
8. Home and family members should be notified about the insurance.
9. The date of renewals and payment of insurance should be taken care at all times.
10. All documents relating to insurance should safely kept.

Advantages of Insurance:

1. Compulsory savings.
2. Safety from risk.
3. Safe future.
4. Interest can be received.
5. Investment opportunity from the single amount received.
6. Loan can be taken at difficult times.