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– Vivek Risal

The catastrophe of the earthquake in 2015 and the resulting aftershocks which can be felt till today has made us realise that lives can be lost in a second. Thousands lost their lives and millions were rendered homeless during the calamity. While most of us have moved on to our daily routine, many are still reeling under the effect. The once in a generation calamity shook me to the core and made me realize the importance of insuring our lives and property.

Although in the developed economies, the essence of an insurance policy is witnessed from the early upbringing, in our part of the world, we are still speculating on the benefits. We are more reactive than proactive on most matters and when it comes to the topic of insurance, it’s given that insurance has still not penetrated our daily existence.


Insurance is a contract which is represented by a policy in which a person or entity receives financial benefits or reimbursement against losses from an insurance company in case of a specified contingency in the future. Insurance policies are used to offset the risks arising from financial losses of any magnitude that may result from the damage to the insured or the property.


In Nepal, insurance policies are divided into two categories namely life and non-life or general insurance. Life insurance is a protective tool against the loss if income that would result if the insured passes away. Some of the benefits associated with life insurance include mortgage protection, protection against disabilities, children education and tax relief. Life insurance is also divided into two: term life and whole life insurance. Term life insurance is a policy which stays in effect for a predetermined period or until the insured has attained a certain age. Whole life insurance covers an individual until his or her death unless the policy lapses due to non-payment of the premium amount.

Non-life insurance or general insurance provides a cover or protects the policyholder from losses or damages caused by specific risk. Examples of non-life insurance are property insurance, health or disability insurance and business insurance. When an individual takes a home or auto loan from a bank, it is mandatory to initiate an insurance policy to cover the risks from it.


An individual or entity should first decide what to cover and the likely risks or ‘perils’ against it. For example, if a person wants to insure himself, the person has to define the associated risks. Or, if an entity seeks to insure the property of an organisation against fire then the peril is the fire. The individual or the entity then has to approach the insurance company and fill out the form detailing the above facts. Thereafter, the insurance company scrutinises the form and submits the insurance premium to be paid. A premium is the amount of money that an individual or entity must pay for the insurance policy. The amount of premium depends on a variety of factors including the type of coverage, the likelihood of a claim to be made, the area where the policyholder lives or operates the business, the behaviour of the person or business covered. The premium can be paid either monthly, quarterly, semi-annually or annually in installments depending on the policy of the organisation. However, the premium can differ according to the nature of the individual or organisation. For example, a politically active person has to pay more as against a person who is politically inactive.


Relief of Stress: An insurance policy offers mental relief from the constant uncertainty that life throws at us. One may not be able to prevent the fire in his house but will be insured against the damages from it. Likewise, one cannot predict the day you will be diagnosed with a terminal disease, but your policy will pay for your treatment and provide necessary relief to your family in case of such hardships.

Business Risk:

Any business, small or big, is based on risk. For example, an individual airline carrier carries an enormous amount of risk when they fly planes full of passengers. The airline itself is worth a lot of money along with the added stigma of the passengers facing death or injuries during the flight. Airline companies carry and fulfill insurance policies to manage all the risks associated with it. It’s hard to imagine that without the insurer in place to pay all the various liabilities on their behalf, we would not have been commuting so efficiently from one place to another. In hindsight, insurance frees the businesses of such risks and allows to operate without the fear of huge financial losses.


Insurance does not only pay the losses that occur but also provides invaluable suggestions to prevent losses in the first place. An insurance company specializing in fire insurance can often offer professional assistance for avoiding the most common causes of loss due to fire. The hackneyed phrase-safety first, applies in life and in business too.

While the article dwelt on insurance and why one should insure, it is at the hands of the corresponding individual or entity to go ahead with the insurance policy. In times of uncertainty, an insurance policy is one certainty by which one can fall back on. With insurance policy in place, the phrase – WHAT IF can be a thing of the past and the perks of insurance can be relished.