Kathmandu. On the occasion of Global Money Week, which is celebrated as Financial Literacy Week worldwide, Nepal Rastra Bank, the central bank of Nepal, released a 58-page booklet titled Financial Literacy Basic Concepts.
The booklet includes various topics of financial transactions as well as insurance. Along with the introduction of insurance in the booklet, the Rastra Bank has also mentioned the aspects that customers should pay attention to while taking out insurance.
Introduction to Insurance:
Insurance is a risk management tool through which the risk of an individual or organization is transferred to another organization. The person or organization providing insurance is called the insured and the organization bearing the risk is called the insurer (insurance company). In return for the insured paying a certain amount of premium to the insurance company, the insurance company provides compensation for financial losses caused by risks to the insured’s life or other various assets.
Types of insurance plans:
1) Life insurance:
Life insurance is insurance related to the life of an individual. This type of insurance is done for the financial security of the individual or his family. It provides financial security, i.e. financial relief, in the event of an accident involving a family member. If the insured survives the insurance period, the amount is received and in case of death, the beneficiary receives the amount.
2) Non-life insurance:
Non-life insurance is property insurance. It provides compensation for property damage due to incidents such as fire, theft, etc. For example, it provides compensation equal to the loss in case of damage to houses, vehicles, livestock, crops, and other properties.
3) Health Insurance: Health insurance covers the expenses of health treatment and hospitalization.
Things to consider while taking out insurance:
When taking out insurance, you should only take out insurance that suits you after understanding all the terms and conditions. Before taking out insurance, the insured should get information about the type of insurance policy, duration, risk coverage, insurance premium, etc. Generally, the insured should pay attention to the following before insuring.
1) Insurance premium and saving capacity:
First of all, when insuring, you should pay attention to whether you can pay the insurance premium in the coming years or not.
2) Authorized agent:
You should trust the insurance agent only after knowing whether he is officially licensed by the Insurance Committee.
3) Risk management:
The risk for which you are insuring or the risk that is most likely to occur and There should be information about whether the risk is reduced or not after insurance.
4) Insurance information:
After getting insurance, family members should also be informed. At least the person you want should be informed.
5) Insurance terms:
After getting insurance, all the details, conditions, facilities and other provisions mentioned in the insurance policy should be read carefully.
6) Keeping documents safe:
All insurance-related documents should be kept safe. In addition, after paying the insurance premium, it is mandatory to keep the cash receipt safe.
7) Fact Statement:
While taking out insurance, the facts required for the insurance should be clearly disclosed without hiding information related to your health. Insurance policies and regulations may change, so you should keep informed about it.
Other topics covered in the booklet:
Rastra Bank has included topics ranging from the introduction and difference between needs and wants to the management of financial customer complaints in the booklet on financial literacy. The booklet suggests that spending frugally and preparing a family budget will bring happiness to the family. In addition, it is said that it is advisable to teach children the habit of saving from an early age. Along with saving, investment should also be prioritized and how to set financial goals for children’s higher education, medical expenses, home furnishings, electronic equipment, and vehicle purchases, which may be large expenses in the future, are also taught.
In each section of the book, images related to the topic prepared with the help of AI (artificial intelligence) make it easy for the reader to understand the content.
Information about the method of using loan facilities and the difference between simple and compound bank interest rates, along with mathematical formulas, is also mentioned. The need for financial discipline in a person’s life and the measures to be adopted to maintain discipline are also explained in simple words. Introduction to financial service providers licensed by Nepal Rastra Bank and a general introduction to the capital market are also included.
This booklet also includes the topic of cooperative organizations, which have been a boon to millions of ordinary people in recent times. A cooperative is defined as a community-based autonomous organization established to integrate the capital, technology and talent scattered among marginalized communities or ordinary consumers on the basis of self-reliance and reciprocity and to improve the economic, social and cultural needs of its members. Through this definition, the Rastra Bank has expressed the intention that the regulation and discipline of cooperatives should be maintained by the community itself.
Section 14 of the booklet mentions the introduction of the Credit Information Center, the services it provides, financial conduct and the provision of the blacklist. The remittance section of the booklet urges people to send and receive remittances through formal channels. More than 25 percent of the gross domestic product of Nepal’s economy is financed by foreign exchange received from remittance inflows.
In sections 16 and 17, the book also covers general topics related to electronic financial services, including fraud in electronic transactions. The last section contains information about the grievance redressal unit of the Nepal Rastra Bank, the complaint registration and hearing process regarding any service related to banks and financial institutions.
