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Types of Insurance
A detailed guide about different Types of Insurance Policies in
Throughout everyday life, spontaneous costs are a harsh truth. In any
event, when you believe that you are monetarily secure, an unexpected or
unanticipated use can essentially hamper this security.
Contingent upon the degree of the crisis, such occurrences may likewise
leave you obligation-ridden. While you can't prepare for possibilities
emerging from such episodes, protection approaches offer a similarity to
help to limit monetary obligation from unanticipated events.
There is a wide scope of protection approaches, each pointed toward
shielding specific parts of your wellbeing or resources. Comprehensively,
there are 8 kinds of protection, specifically:
Basically knowing the different protection approaches doesn't help. All
things being equal, you should know how every one of these plans
functions. Without sufficient information about every one of them, you
will most likely be unable to secure your funds, just as the monetary
prosperity of your relatives. Peruse on to get familiar with all you need
to think about the different protection approaches. 1. Life
Life coverage alludes to an arrangement or cover whereby the policyholder
can guarantee independence from the rat race for his/her relatives in the
afterlife. Assume you are the sole procuring part of your family,
supporting your mate and kids.
On such an occasion, your demise would monetarily annihilate the entire
family. Disaster protection approaches guarantee that something like this
doesn't occur by giving monetary help to your family in case of your
Types of Life Insurance Policies
There are primarily seven different types of insurance policies when it
comes to life insurance. These are:
Term Plan - The death benefit from a term plan is only available for a
specified period, for instance, 40 years from the date of policy
Endowment Plan - Endowment plans are life insurance policies where a
portion of your premiums go toward the death benefit, while the
remaining is invested by the insurance provider. Maturity benefits,
death benefits,s, and periodic bonuses are some types of assistance from
Unit Linked Insurance Plans or ULIPs - Similar to endowment plans, a
part of your insurance premiums goes toward mutual fund investments,
while the remaining goes toward the death benefit.
Whole Life Insurance - As the name suggests, such policies offer life
cover for the whole life of an individual, instead of a specified term.
Some insurers may restrict the whole life insurance tenure to 100
Child’s Plan - Investment cum insurance policy, which provides financial
aid for your children throughout their lives. The death benefit is
available as a lump-sum payment after the death of parents.
Money-Back - Such policies pay a certain percentage of the plan’s sum
assured after regular intervals. This is known as a survival
Retirement Plan - Also known as pension plans, these policies are a
fusion of investment and insurance. A portion of the premiums goes
toward creating a retirement corpus for the policyholder. This is
available as a lump-sum or monthly payment after the policyholder
Benefits of Life Insurance
If you possess a life insurance plan, you can enjoy the following
advantages from the policy.
Tax Benefits - If you pay life insurance premiums, you are eligible for
tax benefits in India, under Section 80(C) and 10(10D) of the Income Tax
Act. Thus, you can save a substantial sum of money as taxes by opting
for a life insurance plan.
Encourages Saving Habit - Since you need to pay policy premiums, buying
such an insurance policy promotes the habit of saving money.
Secures Family’s Financial Future - The policy ensures your family’s
financial independence is maintained even after your demise.
Helps Plan Your Retirement - Certain life insurance policies also act as
investment options. For instance, pension plans offer a lump-sum payout
as soon as you retire, helping you to fund your retirement.
Now that you know all about life insurance policies read on to understand
the various facets of other general insurance policies.
2. Motor Insurance
Motor insurance refers to policies that offer financial assistance in the
event of accidents involving your car or bike. Motor insurance can be
availed for three categories of motorized vehicles, including:
Car Insurance - Personally owned four-wheeler vehicles are covered under
such a policy.
Two-wheeler Insurance - Personally owned two-wheeler vehicles, including
bikes and scooters, are covered under these plans.
Commercial Vehicle Insurance - If you own a vehicle that is used
commercially, you need to avail of insurance for the same. These
policies ensure that your business automobiles stay in the best of
shape, reducing losses significantly.
Types of Motor Insurance Policies
Based on the extent of cover or protection offered, motor insurance
policies are of three types, namely:
Third-Party Liability - This is the most basic type of motor insurance
cover in India. It is the minimum mandatory requirement for all
motorized vehicle owners, as per the Motor Vehicles Act of 1988. Due to
the limited financial assistance, premiums for such policies also tend
to be below. These insurance plans only pay the financial liability to
the third party affected in the said mishap, ensuring that you do not
face legal hassle due to the accident. They, however, do not offer any
financial assistance to repair the policyholder’s vehicle after
Comprehensive Cover - Compared to the third-party liability option,
comprehensive insurance plans offer better protection and security.
Apart from covering third-party liabilities, these plans also cover the
expenses incurred for repairing the damages to the policyholder’s own
vehicle due to an accident. Additionally, comprehensive plans also offer
a payout in case your vehicle sustains damage due to fire, man-made and
natural calamities, riots, and other such instances. Lastly, you can
recover your bike’s cost if it gets stolen, when you have a
comprehensive cover in place. One can also opt for several add-ons with
their comprehensive motor insurance policy that can make it
better-rounded. Some of these add-ons include zero depreciation cover,
engine and gear-box protection cover, consumable cover, breakdown
Own Damage Cover - This is a specialized form of motor insurance, which
insurance companies offer to consumers. Further, you are eligible to
avail of such a plan only if you purchased the two-wheeler or car after
September 2018. The vehicle must be brand new and not a second-hand one.
You should also remember that you can avail this standalone own damage
cover only if you already have a third-party liability motor insurance
policy in place. With your own damage cover, you basically receive the
same benefits as a comprehensive policy without the third-party
liability portion of the policy.
Benefits of Motor Insurance
Policies Cars and bikes are increasingly more expensive with each passing
day. At such a time, staying without proper insurance can lead to severe
monetary losses for the owner. Listed below are some advantages of
purchasing such a plan.
Prevents Legal Hassle - Helps you avoid any traffic fines and other
legalities that you would otherwise need to bear.
Meets All Third-Party Liability - If you injure a person or damage
someone’s property during a vehicular accident, the insurance policy
helps you meet the monetary losses, effectively.
Financial Assistance to Repair Your own Vehicle - After accidents, you
need to spend considerable sums on repairing your own vehicle. Insurance
plans limit such out-of-pocket expenses, allowing you to undertake
Theft/loss cover - If your vehicle is stolen, your insurance policy will
help you reclaim a portion of the car/bike’s on-road price. You can
expect similar assistance if your vehicle is damaged beyond repair due
Additionally, individuals who own a commercial car/two-wheeler can also
avail of tax benefits if they pay premiums for that vehicle.
3. Health Insurance
Health insurance refers to a type of general insurance, which provides
financial assistance to policyholders when they are admitted to hospitals
for treatment. Additionally, some plans also cover the cost of treatment
undertaken at home, prior to hospitalization, or after discharge from the
same. With the rising medical inflation in India, buying health insurance
has become a necessity. However, before proceeding with your purchase,
consider the various types of health insurance plans available in India.
Types of Health Insurance policies
There are eight main types of health insurance policies available in
India. They are:
Individual Health Insurance - These are healthcare plans that offer
medical cover to just one policyholder.
Family Floater Insurance - These policies allow you to avail health
insurance for your entire family without needing to buy separate plans
for each member. Generally, husband, wife, and two of their children are
allowed health cover under one such family floater policy.
Critical Illness Cover - These are specialized health plans that provide
extensive financial assistance when the policyholder is diagnosed with
specific, chronic illnesses. These plans provide a lump-sum payout after
such a diagnosis, unlike typical health insurance policies.
Senior Citizen Health Insurance - As the name suggests, these policies
specifically cater to individuals aged 60 years and beyond.
Group Health Insurance - Such policies are generally offered to
employees of an organization or company. They are designed in such a way
that older beneficiaries can be removed, and fresh beneficiaries can be
added, as per the company’s employee retention capability.
Maternity Health Insurance - These policies cover medical expenses
during pre-natal, post-natal, and delivery stages. It covers both the
mother as well as her newborn.
Personal Accident Insurance - These medical insurance policies only
cover financial liability from injuries, disability, or death arising
due to accidents.
Preventive Healthcare Plan - Such policies cover the cost of treatment
concerned with preventing a severe disease or condition.
Benefits of Health Insurance
After assessing the various kinds of health insurance available, you must
be wondering why availing of such a plan is essential for you and your
loved ones. Look at the reasons listed below to understand why.
Medical Cover - The primary benefit of such insurance is that it offers
financial coverage against medical expenditure.
Cashless Claim - If you seek treatment at one of the hospitals that have
tie-ups with your insurance provider, you can avail of a cashless claim
benefit. This feature ensures that all medical bills are directly
settled between your insurer and the hospital.
Tax Benefits - Those who pay health insurance premiums can enjoy income
tax benefits. Under Section 80D of the Income Tax Act, one can avail a
tax benefit of up to Rs.1 Lakh on the premium payment of their health
There may be additional advantages, depending on the insurance provider in
4. Travel Insurance
When talking about the different types of insurance policies, one must not
forget to learn more about travel insurance plans. Such policies ensure
the financial safety of a traveler during a trip. Therefore, when compared
to other insurance policies, travel insurance is a short-term cover.
Depending on the provider you choose, travel insurance may offer
financial aid at various times, such as during loss of baggage, trip
cancellation, and much more. Here is a look at some of the different types
of travel insurance plans available in the country:
Domestic Travel Insurance - This is the kind of travel insurance
policy that safeguards your finances during travels within India.
However, if you plan to step outside the country for a vacation, such a
policy would not offer any aid.
International Travel Insurance - If you are stepping out of the country,
ensure you pick an international travel insurance plan. It allows you to
cover the unforeseen expenses that can arise during your trip like
medical emergencies, baggage loss, loss of passport, etc.
Home Holiday Insurance - When you are traveling with family, your home
remains unguarded and unprotected. Chances of burglary are always
significant, which may lead to significant losses. Thankfully, with home
holiday insurance plans, which are often included within travel
policies, you are financially protected from such events as well.
Benefits of Travel Insurance
The following aspects are covered under travel insurance
Cover Flight Delay - Flight delays or cancellations can lead to
significant losses for the passenger. If you buy travel insurance, you
can claim such financial losses from the insurer.
Baggage Loss/Delay - Travel insurance lets you claim monetary assistance
if there is a delay or you happen to lose your luggage during the trip.
With this amount, you can purchase some of the necessary items.
Reclaim Lost Travel Documents - Visa and passport are essential
documents during an international trip. Opting for international travel
insurance ensures that you have the necessary financial backing to
reapply for interim or replacement documents as and when
Trip Cancellation Cover - A sudden death in the family or a medical
emergency may play a spoilsport with your travel arrangements.
Thankfully, international travel insurance plans support trip
cancellations in such events. You can claim financial assistance to pay
penalties and cancellation charges for flights, hotels, etc.
Make sure that you choose an insurer carefully, especially a company that
is reliable and available 24x7 to assist you.
5. Property Insurance
Any building or immovable structure can be insured through property
insurance plans. This can be either your residence or commercial space. If
any damage befalls such a property, you can claim financial assistance
from the insurance provider. Keep in mind that such a plan also
financially safeguards the content inside the property.
Types of Property Insurance in India
Here are some types of property insurance policies available in
Home Insurance - With such a policy, you remain free from all financial
liabilities that may arise from damage to your home or contents inside
due to fires, burglaries, storms, earthquakes, explosions, and other
Shop Insurance - If you own a shop, which acts as a source of income for
you, it is integral to protect yourself from financial liability arising
from the same. Whether the liability occurs due to natural calamities or
due to accidents, with these plans, you can immediately undertake
repairs to the shop.
Office Insurance - Another type of property insurance policy, office
insurance ensures that the office building and all the equipment inside
are significantly protected in the event of unforeseen events.
Generally, office spaces include expensive equipment, such as computers,
servers, and much more. Thus, availing of these plans is
Building Insurance - If you own a complete building, opting for home
insurance may not be sufficient. Instead, you can purchase building
insurance to cover the entire premises.
Benefits of Property Insurance
If you still think that property cover is not one of the types of
insurance plans you need to avail, take a look at some of the advantages
from the same.
Protection against Fires - While the insurance policy cannot prevent
fires, it can prevent financial liabilities from such an event.
Burglaries - If your property exists in an area prone to theft and
burglaries, such a policy is vital to ensure financial security.
Floods - In certain parts of India, floods are common. These floods can
ravage your property leading to substantial losses. Property insurance
also protects against such events.
Natural Calamities - The plan also offers financial aid against damage
arising from earthquakes, storms, and more.
Rebuilding or renovation of a property is immensely expensive. Thus,
property insurance policies are the best option to ensure long-term
6. Mobile Insurance
Owing to the rising price of mobile phones and their several applications
today, it has become imperative to ensure the device. Mobile insurance
allows you to reclaim money that you spend on repairing your phone in the
event of accidental damage. Further, you can also claim the same in case
of phone theft, making it easier to replace the handset with a new
Benefits of Mobile Insurance
Mobile insurance policies are extremely beneficial, especially for those
who own a premium smartphone.
Comprehensive protection for new devices - The value of phones tends to
decline with time. Thus, when the handset is new, phone insurance can
help safeguard its significant value.
Coverage against Damage to Screen - If you accidentally damage the
smartphone screen, which is one of the most important parts of such
devices, your insurance plan will pay for the repair expenses.
Theft or Robbery of Smartphone - Nothing is worse than buying your dream
smartphone and losing it due to theft or burglary. Well, phone insurance
will help you afford a replacement handset if such an unfortunate thing
Some insurers may not allow you to buy insurance for the smartphone after
a month or two passes from the purchase of the handset.
7. Cycle Insurance
Bicycles are valuable properties in India as some people rely on these
vehicles for their daily commute. A cycle insurance policy ensures that
you have access to necessary funds should your bicycle undergo accidental
damage or theft. It saves your out-of-pocket expenses, while also ensuring
immediate repairs to the vehicle.
Benefits of Cycle Insurance
The advantages of availing of such an insurance policy are:
Worldwide Coverage - Depending on the insurance provider, cycle
insurance policies provide financial assistance regardless of where your
bicycle undergoes damage. Even if you meet with a cycling accident in a
different country, such a plan will offer aid.
Protection against Fires and Riots - If your bicycle sustains damage due
to accidental fires and/or rioting, insurance policies will provide the
necessary financial assistance to repair or undo the damage.
Accidental Death Benefit - If you pass away due to bicycle accidents,
the insurance policy for the cycle would offer a lump-sum payout to your
surviving family members.
Regardless of your cycle’s price, opting for insurance can reduce your
financial liabilities significantly.
8. Bite-Size Insurance
Bite-sized insurance policies refer to sachet insurance plans that
minimize your financial liability for a very limited tenure, generally up
to a year. These insurance plans allow you to protect your finances
against specific damage or threats. For instance, particular bite-sized
insurance may offer accidental cover of Rs. 1 Lakh for a year.
You can choose this policy when you think you might be particularly
susceptible to accidental injuries. Another example is insurance cover for
specific diseases. For instance, if your area is prone to water-borne
diseases, such as cholera, you can pick a policy that covers cholera
treatment and all associated costs for a 1-year period.
Benefits of Bite-sized Insurance
The primary benefit of bite-size insurance policies is that it allows you
to avail financial protection at very limited prices.
The premiums are so low that it hardly makes any impact on your
overall monthly expenditures. In comparison, the sum insured is