Key Considerations Before Opting for Insurance

Although the insurance sector in Bangladesh officially began with the establishment of the General Insurance and Life Insurance Corporations in 1973, today, March 1, marks the first-ever celebration of National Insurance Day in the country.Currently, approximately 17.5 million people in Bangladesh are under various types of insurance coverage. However, many individuals remain skeptical about the benefits and significance of insurance.

Economic analysts emphasize that insurance can act as a vital financial safeguard for an investor’s future, while also institutionally mitigating risks.

What is Insurance?

According to Professor Hasina Sheikh, Director of the Department of Banking and Insurance at Dhaka University, insurance is a mechanism through which individuals or entities transfer potential risks related to life, property, or goods to an institution in exchange for a predetermined amount.

Read More: Top 10 Universities in India for Higher Education

“In simple terms,” Professor Sheikh explains, “insurance is an investment. You are setting aside a certain amount of money now, considering future uncertainties. Over a specified period, you will receive your investment back, thereby sharing your risks with the insurance provider.”

For example, health insurance works on the principle of depositing a certain amount regularly to safeguard against unforeseen health issues. If an accident or illness occurs, the insurance company covers a significant portion of the medical expenses.

The regular payment you make towards this coverage is known as the premium.

Most health insurance policies in Bangladesh offer services through listed hospitals, where policyholders can access cashless medical benefits or claim reimbursement post-treatment.

Types of Insurance in Bangladesh

Insurance in Bangladesh is broadly categorized into two types:

1. Life Insurance
Life insurance policies are designed to provide financial security to an individual’s family or designated nominee in the event of the policyholder’s demise. Upon the death of the insured, the beneficiary receives the entire insured amount as per the policy terms.

Read More: What to Do Quickly When Experiencing Ear Pain in Cold Weather

2. General Insurance
General insurance covers risks associated with assets, property, or goods. This type of insurance helps individuals or businesses safeguard themselves against potential financial losses due to theft, damage, or natural disasters.

Why Consider Insurance?

Insurance is more than just a financial product; it is a security net that prepares you for the unexpected. Here are some reasons why opting for insurance is crucial:

• Risk Management: Insurance allows you to transfer significant risks to a reliable institution, reducing the financial burden during unforeseen events.
• Financial Security: Life insurance provides your family with stability and support in the face of tragic circumstances.
• Peace of Mind: Knowing you are covered in the event of illness, accidents, or property damage lets you focus on other priorities.

Read More: Diet Tips for Men Over 50 to Maintain Heart and Cholesterol Health

Before purchasing an insurance policy, thoroughly review the terms, benefits, and premium structure to ensure it aligns with your needs and financial goals.

Here’s a well-structured and original English version of the content tailored for your website:

Types of General Insurance and Key Insights on the Industry in Bangladesh

General insurance in Bangladesh encompasses a wide range of categories, including health, trade, industry, agriculture, and motor insurance, among others. Currently, there are 78 insurance companies operating in the country. Out of these, 32 are life insurance companies, and 46 are general insurance companies.

Additionally, there are two state-owned corporations—one for life insurance and one for general insurance—and two foreign insurance companies in operation.

Key Considerations Before Opting for Insurance

Professor Hasina Sheikh, Director of the Department of Banking and Insurance at Dhaka University, highlights the extensive reach of insurance services in Bangladesh. She notes that insurance networks span even the most remote areas, creating significant opportunities for financial inclusion.

Unlike banks, where individuals must visit branches for opening accounts or making deposits, insurance agents provide a more accessible service by visiting customers at their homes. This convenience has encouraged rural farmers to insure their agricultural products and livestock.

Read More: 10 Simple Tips to Gain Weight in a Healthy Way

However, concerns about receiving promised payouts at the end of the policy term have led to skepticism. To avoid potential issues, Professor Sheikh advises that customers should carefully consider the following factors before purchasing insurance:

• Understand the Terms and Conditions: Always review and fully comprehend the terms of the insurance policy before signing.
• Premium Payment Rules: Be aware of the guidelines and deadlines for premium payments, and understand the steps to take if deadlines are missed.
• Payout Amount and Timeline: Ensure clarity on the exact amount you will receive and the timeline for receiving it after the policy matures.
• Legal Protection: Verify the legal safeguards available in case the promised payout is delayed or not provided at all.

Challenges in Bangladesh’s Insurance Sector

Despite operating for over 47 years, the insurance industry in Bangladesh faces a significant trust deficit among the public.

Professor Hasina Sheikh points out that a lack of awareness and understanding of insurance policies often leads to confusion. For instance, many customers fail to pay attention to the fine print when signing up for insurance, leading to complications during claim settlements.

Moreover, complaints about delayed payouts, particularly in life insurance cases following the policyholder’s death, are not uncommon.

The challenges are not solely on the customer’s side. Insurance companies often fail to adequately inform clients about policy details or ensure timely payouts. The lack of training and professionalism among insurance agents also exacerbates these issues.

To build trust and improve the sector, the following steps are recommended:

• Agent Training: Proper training and skill development for insurance agents to ensure they can effectively explain policy details to customers.
• Timely Payouts: Insurance companies must honor their commitments and ensure customers receive payouts without unnecessary delays.
• Enforcement of Penalties: Strong regulatory measures should be in place to penalize companies that breach their promises or fail to meet their obligations.

Read More: Tea or Coffee, Which is Healthier for Whom?

Conclusion

The insurance sector in Bangladesh holds immense potential for financial security and risk management. However, to realize this potential, transparency, trust, and customer education must be prioritized.

By addressing these challenges, insurance can become a more reliable tool for financial protection, reaching millions more across the nation.