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Accidents or losses of any kind, including death, are the formidable realities that come uninvited, without a knock on the door, and turn our lives upside down. While there is absolutely nothing that we can do to stop these uncertainties, we can certainly make our lives shockproof.
Insurance is a tool that provides us with much-needed protection from uncertainties. Now, selecting the correct type of insurance with the right amount is one prudent decision we need to make to safeguard our assets or financial stability.
Insurance is a legal contract between an insured (individual or entity) and an insurer (insurance company) to get financial coverage in case of damages or losses under specific circumstances.
Throughout the policy period, the insured must pay regular premiums, and the insurer is responsible for providing the financial coverage in case an unfortunate event occurs, like the death of the policyholder or the damage or loss of their insured assets.
While there is a wide range of Insurance types available in the market, all of them can be broadly classified into two main categories:
While Life Insurance provides you with financial coverage against your life, a General Insurance policy indemnifies you against any losses for your non-life assets.
Below is the further classification of the above two types of Insurance:
Basically, an insurance that does not lie in the ambit of Life Insurance is General Insurance.
General Insurance provides coverage against any financial loss incurred due to any loss or destruction of the insured asset. It safeguards your assets like a Bike, Car, Home, Travel, Health, or even your beloved electronic gadgets from any loss.
A Health Insurance is your savior against the expenses incurred due to any illness or medical emergency.
There are various types of health insurance available based on their coverage:
These have different products under them based on their usage and many other factors. Here is a list of major types of health insurance products available in India:
You must have a Motor insurance policy not just because it is mandatory in India but also because the policy ensures that the vehicle has complete protection against physical damage from natural or artificial calamities and third-party liabilities arising from the insured vehicle.
Based on the type of vehicle they cover, Motor Insurance is broadly categorized into:
The different types of Motor Insurance Policies available in the market under the ones mentioned above are as follows:
Additionally, you can purchase some add-ons like Zero depreciation cover, Loss of personal belongings cover, Pay-as-you-drive cover, Daily conveyance cover, etc. to ensure that you are covered against any eventuality.
Travel Insurance is your financial safeguard when you are travelling. It covers loss of baggage, loss of passport, hijacking, medical emergencies, delayed flights, accidental deaths, adventure sports etc.
The major types of travel insurance are:
Under the above types, there are different products like Individual Travel Insurance, Family Travel Insurance, Senior Citizen Travel Insurance, Corporate Travel Insurance, Multi Trip Travel Insurance, Single Trip Travel Insurance, Group Travel Insurance, and Schengen Travel Insurance.
A Property Insurance Policy provides financial reimbursement to the owner/renter of a building and its contents.
Some products available in the market under property insurance include:
A Commercial Lines Insurance policy ensures that the business does not face any financial burden because of any financial and business risks. It provides coverage to business, its employees and ownership.
Furthermore, Commercial Insurance has several Insurance types based on the type of asset covered, viz:
Business Insurance: Business insurance provides coverage for losses related to a company’s core operations like interruption of business operations, product liability, professional liability, etc.
Commercial Property Insurance: Provides financial coverage for damages to a business’s physical assets from theft, vandalism, fire, explosions, storms and burst pipes.
Professional Liability Insurance: Professional liability insurance covers errors in the services that a company provides, including negligence, inaccurate advice, etc.
Umbrella Liability Insurance: Offers additional coverage over the maximum amount offered by a commercial liability insurance policy.
Apart from the above major categories of General Insurance, there are a few more types as below:
Asset Insurance provides financial coverage to your assets like Mobile, TV, and other appliances or electronics so that their expensive repair doesn’t hit your pocket.
Pet Insurance covers your furry baby’s health and well-being requirements, such as any medical condition, such as pregnancy complications, dental treatments, and insect-borne diseases. It also covers a lot of other conditions like pet theft, loss or damages to a third party because of the pet, accidents, overseas coverage and many more, depending on your insurance provider.
Bite-size Insurance, or small-ticket insurance/sachet insurance is available at very low premiums and focuses on specific needs. More than being a type, it is a category of insurance that is unrestricted across all categories like health, travel, property etc.
A few common Bite-Sized insurance products available in the market are:
Life Insurance provides financial coverage for the most uncertain part of human life: Life itself! Thus, it offers financial protection to the Life Assured's family in case of unfortunate events like the death or disability of the policyholder. In addition to the life coverage, some policies also provide a savings component and can be used as a prudent investment option.
Below are the major types of Life Insurance policies in India:
Term Insurance is the most basic type of Life Insurance that provides Life Cover for a predetermined period called the 'term' of the policy.
Since they do not offer any cash value, they are generally available at a much lower premium than other products for the same amount of coverage. If the Life Assured dies during the policy term, the nominee receives the Sum Assured, and there is no maturity value if the Life Assured survives the policy term. However, certain Term Plans offer the option of Return of Premium which is paid to the policyholder if Life Assured survives the policy term.
Also known as Traditional Life Insurance, Whole Life Insurance provides coverage for the policyholder's entire life. Besides this life cover, they also have a savings component and accrue periodic bonuses.
Generally, the Whole Life Insurance Plans have a maturity period of 100 years, and if a policyholder survives this term; they are paid a maturity amount.
A perfect mix of Investment and Insurance, Endowment Plans provide Life Coverage and help build a corpus for major life goals.
A portion of the premium goes towards Sum Assured while the other portion is invested in certain low-risk investments. In case of the policyholder's demise during the policy term, the Sum Assured is paid to the nominee. However, if the policyholder survives the term, they receive a maturity amount along with the accrued bonuses.
Thus, Endowment Plans serve the dual purpose of Insurance and Investment.
Money Back Policies are essentially the Endowment Plans only with the additional feature of payments at certain pre-defined intervals during the policy term. Additionally, on maturity, the maturity benefits are paid along with accrued bonuses.
In case of the policyholder’s demise during the term, Sum Assured is paid to the nominee regardless of the survival benefits already paid.
ULIPs provide Life Coverage and capital-building opportunities by investing in various market-related instruments and funds of varying risks.
ULIPs have some underlying funds related to different asset classes like Equity, Hybrid and Debt funds where a certain portion of the premium is invested as per the policyholder's risk appetite. While this portion of the premium helps generate returns, the other portion goes to the Life Coverage part.
ULIPs are flexible to a certain extent. They allow partial withdrawal after a lock-in period of 5 years and the switching of funds that can help you customize your investment as per your financial goal and life stage.
Also known as Retirement Plan, Pension Plan helps to accumulate wealth for the golden years of one's life and helps you deal with the financial uncertainties of the post-retirement phase.
Thus, a pension plan allows you to contribute a specific portion of your income as a premium during your earning years. Subsequently, in your retirement phase, this accumulated amount is paid back to you in the form of an annuity or pension at regular intervals.
These are specially designed endowment plans meant to financially secure a child's future in case any mishap occurs with their parents or, more importantly, the sole earning parent.
In the event of the policyholder's death, the child receives a certain sum assured. However, the policy does not end there. Future premiums are waived off/paid by the insurer, and the child also keeps receiving some amount at regular intervals. This plan ensures the demise of the earning parent does not impact the child's education.
A group life insurance policy offers financial coverage to families of the members of a group in case of an unfortunate demise. The entire group gets life insurance coverage under a single policy.
Such plans are usually applicable in case of employer-employee relationships (companies) and non-employer-employee relationships (welfare organisations).
A group term insurance policy provides financial coverage to a group of individuals for a specific time period. It is usually provided by employers to employees and is renewable on an annual basis.
In case of the insured employee’s unfortunate demise, the death benefit is provided to the designated beneficiary.
Guaranteed plans provide the benefits of both savings and insurance. They offer a guaranteed return on investment after the policy matures either in the form of a lump sum or regular income over a specific time period.
What’s more, such policies also come with death benefits thus providing financial coverage to the insured individual’s family members in case of the former’s unfortunate demise.
Both general insurance and life insurance come with their unique set of benefits. Scroll down to learn about them in detail:
Any individual needs to have a general insurance policy owing to the risks posed by accidents, medical emergencies, natural calamities, and other unforeseen circumstances. The policy provides financial protection in case such situations arise in our lives. We cannot predict an accident or calamity; however, we can be better prepared to handle them.
Here are a few benefits that General Insurance provides:
Life Insurance is basically the Kavach that protects your dependent family if, God forbid, anything happens to you. Here are the most crucial benefits that Life Insurance provides:
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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