Types Of Insurance Policies In India
Life is uncertain and insurance policies can guard you and your loved ones against unexpected financial losses during an emergency.
It has never been so necessary to secure ourselves with insurance than the current times.
So let’s first discuss what an Insurance Policy is and the different components of a policy.
What Is An Insurance Policy?
An insurance policy is a legal contract between you (policyholder) and the insurance company through which you can safeguard yourself and your loved ones from facing a financial crisis during an emergency.
Under the contract, you pay regular amounts of money called premiums to the insurance company and, in case of any, unfortunate event, the insurance company pays you or someone you choose if something bad happens to you.
There are three main elements of an insurance policy
Policy Limit – It is the maximum amount that the insurance companies will pay for a covered loss.
Deductible – This is a fixed amount that you must pay before the insurance company pays your claim.
Premium – It is the amount that you pay to your insurance company over a regular period of time say monthly, quarterly, or annually to avail of an insurance policy.
It’s crucial that you read the terms and conditions of your insurance policy thoroughly to verify if the policy meets your needs and avoid any disagreements with your insurance company in a crisis.
Before purchasing an insurance policy, it is necessary to understand the different types of insurance policies and then choose the ones that align with your needs.
Types Of Insurance Policies
The choice of a specific type of insurance policy is made based on individual needs and life goals.
You can get insurance coverage for almost everything but here are a few key types –
Life Insurance
Life insurance offers coverage against death, or disability, thus, securing your family’s financial security even in your absence. On the sudden demise of the policyholder, the insurance company pays the entire sum to the nominee.
Covers – Death by accidents, Repayment of co-signed debts, Medical bills, child education, Monthly expenses etc.
Types Of Life Insurance
Term Life Insurance – Offers coverage for a specific period of time called the term. If anything happens to you within this term, your family will be compensated.
Whole Life Insurance – Provides cover for the entire life of the insured individual
Child Plan Policy – Pays for the financial requirement of your children such as education and marriage in your absence.
Pension Plans Policy – This helps you build a corpus that you will receive as a regular pension after retirement.
Endowment Plans – It is a combination of financial insurance and investment. One part of your premium goes to your insurance policy and the other is invested at low risks in the market. If you survive the term you get the returns earned on the investments.
Unit Linked Insurance Plans (ULIPs) – ULIPs are very similar to Endowment plans but here the investment returns are much higher and you have the flexibility to choose the allocation of premium for life cover and investment.
Health Insurance
This policy helps you safeguard yourself and your family’s financial standing against the expenses incurred due to medical care. It either pays or reimburses the amount paid towards the treatment of any illness or injury.
Covers – Pre and post-hospitalization charges, Medical Checkups, Daycare Procedures, Treatment of critical illnesses, ICU charges
Types Of Health Insurance
Individual Health Insurance: Offers coverage to only an individual
Senior Citizen Health Insurance: Offers coverage to all individuals above 60 years of age
Family Health Insurance: Provides coverage to a family under a single plan.
Group Health Insurance: Offered to employees by their employer.
Maternity Health Insurance: Covers medical expenses for prenatal, post-natal, and delivery stages, during pregnancy.
Critical Illness Cover: Offers coverage against various critical illnesses like kidney failure, cancer, heart attack, etc.
Personal Accident Insurance: Covers medicare expenses due to accidents, disability, or death.
Motor Insurance
This type offers financial assistance in case your bike or car gets involved in an accident. Unlike other policies, this insurance has been made mandatory by the government for your safety and the safety of others.
Covers – Damages due to natural disasters such as fire, earthquake, floods, fire, etc.
Losses from theft, riots, or any other activity due to human intervention.
Damages caused to third-party like injuries, death, or their property.
Types Of Motor Insurance
Two Wheeler Insurance – Covers two-wheelers against any damages caused by accidents, theft, or natural or manmade disasters. It safeguards both the owner and the third party.
Private Car Insurance – Protects the owner from personal injury; vehicle against the damages caused by accidents, natural disasters, manmade disasters, and theft. It also protects the third party from any damages or injuries.
Commercial Vehicle Insurance – Offers coverage to businesses for losses that occurred due to accidents or property damage where their vehicles are involved.
Home Insurance
As the name suggests, this policy protects your home and the valuables inside it from damages due to natural calamities, man-made disasters, theft or other threats.
Covers – Interior damage costs, Loss of personal belongings, Exterior structural damages, Thefts etc.
Types Of Home Insurance
Home Building Insurance – Offers coverage against any destruction to the house’s structure in the event of a disaster.
Home Contents Insurance – Compensates for loss of goods inside your house like furniture, vehicles, and other appliances.
Burglary and Theft Insurance – Provides coverage against stolen goods.
Personal Accident – Offers coverage to you and your family in case of any unfortunate event such as injury or accident which leads to the sudden demise of the insured individual.
Standard Fire and Special Perils Policy – Covers damages caused due to natural calamities, fir and human-made activities such as explosions or riots
Tenants’ Insurance – Provides financial protection to you (as a tenant) against any loss of personal property living in a rented house
Landlords’ insurance – Protects a landlord against such as loss of rent
Travel Insurance
Travel insurance takes care of any medical and non-medical emergencies whether you are travelling abroad or within the country.
It will ensure that you have a peaceful journey whether you are travelling alone or with your loved ones.
Covers – Loss of passport, Hijacking, Accidental death, Trip Cancellations, Emergency medical expenses, Delayed flights, Loss of baggage,
Types Of Travel Insurance
Individual Travel Insurance – Provides coverage to a single person when travelling alone
Family Travel Insurance – Offers coverage to the entire family under one plan.
Domestic Travel Insurance – Offers coverage for trips within the country.
International Travel Insurance – Provides coverage for any trips outside of the country.
Senior Citizen Travel Insurance – For senior citizens, ageing between 60 to 70 years
Student Travel Insurance – This is for students going abroad for higher studies
Fire Insurance
This insurance policy provides coverage against damages caused to your property or goods due to a fire breakout.
These insurance types cover war risk, turmoil, and riots losses as well.
Covers – Any losses due to fire, lightning, explosion etc.
Property damage such as personal belongings, furnishings, office spaces, machines or inventory; damages caused to a third-party property; replacement, repair or reconstruction costs of the insured property as well as the surrounding structures.
Types Of Fire Insurance
Consequential Policy
Replacement Policy
Valued policy
Specific Policy
Floating Policy
Comprehensive Fire insurance policy
Now that you know different types of insurance policies available in India, you are now well equiped to protect you and your loved ones against unexpected emergencies.
