Any unforeseen circumstance in life has the potential to harm your family’s wellbeing. In such cases, there are several life, health, and general insurance plans available in India that provide both you and your loved ones with complete financial security. You can choose an insurance policy to cover your assets and property at the same time. However, it is crucial to comprehend the many insurance policy kinds and then pick the ones that best suit your demands before making a purchase.
Insurance Types You Should Know
A person and an insurance firm enter into a legal contract known as insurance, whereby the insurer guarantees to provide financial protection (known as the sum guaranteed) against certain risks (premium). India’s insurance offerings may be roughly split into two groups:
- General Insurance
- Life Insurance
Different Types of Insurance Policies Available in India
The following insurance options are available in India:
1. General Insurance
Here are a few of the general insurance options offered in India:
- Health Insurance
- Motor Insurance
- Home Insurance
- Fire Insurance
- Travel Insurance
2. Life Insurance
Different kinds of life insurance exist. The most typical forms of life insurance policies offered in India are as follows:
- Term Life Insurance
- Whole Life Insurance
- Endowment Plans
- Unit-Linked Insurance Plans
- Child Plans
- Pension Plans
Let’s examine the various insurance policy kinds in detail:
One of the insurance types that provides protection in the form of an amount insured against losses suffered other than the policyholder’s death is general insurance plans. In general, general insurance refers to a variety of insurance policies that provide financial security against losses brought on by liabilities related to bikes, cars, homes, health, and other assets. These many general insurance policy types include the following:
The costs associated with receiving medical treatment are covered by some types of insurance policies called health insurances. Health insurance programs either pay for medical expenses incurred in treating illnesses or injuries, or they refund such expenses. Various insurance policies cover various medical care costs.
It often provides protection against:
b) Treatment of critical illnesses
c) Medical bills post hospitalization
d) Daycare procedures
A few different kinds of health insurance policies also pay for resident care and pre-hospitalization costs. rising healthcare expenditures in India is making obtaining health insurance mandatory. In India, there are several varieties of health insurance programs, including:
1) Individual Health Insurance: offers protection to just one person
2) Family Floater Insurance: allows you to enroll your complete family in a single plan, which typically covers your spouse, wife, and two children
3) Critical Illness Cover: specialized forms of health insurance that provide protection against a variety of life-threatening conditions, including cancer, renal failure, heart attack, stroke, and related conditions. At the time of a critical illness diagnosis, policyholders get a lump sum settlement.
4) Senior Citizen Health Insurance: All people over 60 are catered to by these sorts of insurance coverage.
5) Group Health Insurance: offered to a worker by a company/employer.
6) Maternity Health Insurance: This sort of insurance protects both the mother and the child by covering medical costs throughout pregnancy, after delivery, and during the postpartum period.
7) Personal Accident Insurance: These insurance policies provide coverage for debts incurred as a result of unintentional deaths, disabilities, or injuries.
Insurance policies for motor vehicles provide financial support in the event that your automobile or motorcycle is involved in an accident. Motor insurance coverage come in a variety of forms in India, including:
1) Car Insurance: Four-wheelers that are privately owned are protected under this plan. Third-party insurance and comprehensive cover plans are two examples of vehicle insurance kinds.
2) Bike Insurance: These are the several types of insurance policies that provide accident coverage for privately owned two-wheelers.
3) Commercial Vehicle Insurance: This is a sort of insurance that provides coverage for any vehicle used for business purposes.
A home insurance coverage provides full protection for both the structure and contents of your home against any physical damage or destruction, as the name implies. In other words, this sort of insurance will offer protection against any disaster, whether natural or caused by humans, including fire, earthquake, tornado, burglaries, and robberies.
Home insurance coverage come in several forms, including:
1) Home Structure/Building Insurance – Protects the structure of the house against damage during any calamity
2) Public Liability Coverage – Provides coverage against any damage to a guest or third-party on the insured residential property
3) Standard Fire and Special Perils Policy – Coverage against damages caused due to fire outbreaks, natural calamities (e.g., landslides, rockslides, earthquakes, storms, and floods), and anti-social human-made activities (e.g., explosions, strikes, and riots)
4) Personal Accident – Provides financial coverage to you and your family against any kind of permanent dismemberment or sudden demise to the insured individual, anywhere around the world
5) Burglary and Theft Insurance – Provides compensation for stolen goods in case of a burglary or theft
6) Contents Insurance – Provides compensation for loss of furniture, vehicles, and other appliances in case of a fire, theft, flood, or riots
7) Tenants’ Insurance – Provides financial protection to you (as a tenant) against any loss of personal property living in a rented house
8) Landlords’ insurance – Provides coverage to you (as a landlord) against contingencies such as public liability and loss of rent
Different insurance coverages, such as fire insurance plans, provide an amount insured to cover any damages brought on by the outbreak of a fire. These insurance policies often offer a sizable amount of coverage to assist people and businesses in reopening their locations after suffering severe fire damage. These insurance products also cover damages from riots, war, and other unrest.
In India, there are several forms of fire insurance.
1) Valued policy
2) Specific Policy
3) Floating Policy
4) Consequential Policy
5) Replacement Policy
6) Comprehensive Fire insurance policy
As the name implies, travel insurance is a form of insurance coverage that offers you and your loved ones financial security whether you are traveling anywhere in India or overseas. The travel insurance coverage will make sure that you have a stress-free trip whether you are traveling alone or with family and friends.
Any problems that may arise during your journey, such as lost luggage, canceled flights, lost passports, and personal and medical crises, are covered by the travel insurance policy coverage. Travel insurance coverage come in several forms, including:
1) Domestic Travel Insurance: Within the country
2) International Travel Insurance: For any trips or vacations outside of India
3) Individual Travel Insurance: If you are travelling alone
4) Student Travel Insurance: If you are going abroad for further studies
5) Senior Citizen Travel Insurance: For senior citizens, ageing between 60 to 70 years
6) Family Travel Insurance: For any family vacations
Plans for life insurance provide protection against unforeseen circumstances like the policyholder’s death or disability. In addition to offering financial security, a variety of life insurance plans enable the policyholders to increase their savings through recurring investments in various stock and debt fund alternatives.
To protect your family’s financial future from life’s risks, consider purchasing a life insurance policy. If something were to happen to you, your loved ones would be entitled to a sizable sum of money from the insurance coverage. According to your financial needs, you may pick the length of the life insurance policy, the amount of coverage, and the payment choice with this insurance type. The following list includes various life insurance policy types:
- Term Life Insurance
- Whole Life Insurance
- Endowment Plans
- Unit-Linked Insurance Plans
- Child Plans
- Pension Plans
Term Life Insurance Plans
- The simplest and least expensive sort of insurance policy where you may choose a high level of life coverage for a certain period of time is term insurance. By paying a little premium, you may get term life insurance to protect your family’s financial future (term insurance plans generally do not have any maturity value, and thus, offer lower rates of premium than other life insurance products.)
- Your loved ones would get the agreed-upon Sum Assured in accordance with the selected payment choice if anything were to happen to you during the policy time (some term insurance types offer multiple payout options as well)
Whole Life Insurance Plans
- In contrast to other life insurance products that give coverage for a certain number of years, whole life insurance plans, usually referred to as “conventional” life insurance policies, offer coverage for the insured person’s whole lifetime.
- A whole life insurance plan includes a savings element that helps build a cash value throughout the course of the policy, in addition to offering to pay a death benefit. The full life insurance policy has a 100-year maturity period. The entire life insurance policy will turn into a matured endowment if the insured person survives past the maturity age.
Endowment plans fundamentally give policyholders financial protection from life’s risks while enabling consistent savings over a specific time period. If the policyholder lives to the end of the policy term, the endowment plan matures and pays out a lump payment.
The life insurance endowment policy pays your family(beneficiaries) the full Sum Assured in the event that you (as the Life Insured) pass away.
Unit-Linked Insurance Plan (ULIP)
Unit Linked Insurance Plans are certain kinds of insurance contracts that provide both investment and insurance advantages. Your contribution to a unit-linked insurance plan’s premium is split between a number of market-linked equities and debt instruments.
Throughout the duration of the policy, the remaining premium helps to provide the life insurance. You have the freedom to select the premium allocation into various assets in this investment-cum-insurance type product in accordance with your financial needs and tolerance for market risk.
Child plans are special insurance policies that assist you in providing for your children even when you are not around, enabling them to pursue life objectives like further education and marriage. In other words, kid plans provide a mix of insurance and savings advantages that help you prepare your finances for your child’s requirements at the appropriate age.
The amount earned upon Maturity under this sort of insurance can be utilized to meet your child’s financial needs.
Pension plans, usually referred to as retirement plans, are a category of investment plans that help you build up some of your resources over time.
Basically, a pension plan ensures that you continue to get a stable stream of income even after your working years are over, which helps you deal with financial difficulties after retirement.
In other words, you may think of a pension plan as a kind of insurance in India that enables you to build a financial cushion for your life after retirement and to which you make regular contributions of a certain amount of money up to retirement. The accumulated sum is then periodically returned to you as an annuity or pension.
Tax Benefits of Various Types of Insurance in India
Tax deductions are available for amounts paid toward premiums for several types of life insurance plans.
1. The premium paid for all types of life insurance policies is tax deductible up to Rs 1.5 lakh under Section 80C of the Income Tax Act of 1981.
2. The premium paid for all types of health insurance plans is tax deductible under Section 80D of the Income Tax Act of 1981, subject to a maximum of Rs 25,000 for oneself, one’s wife, and one’s children, and an additional Rs 25,000 for parents who are under the age of 60. The tax savings can reach Rs 50,000 for senior citizens individuals and Rs 50,000 if parents are senior citizens. Total deductions are up to one million)
Factors Defining Your Life Insurance Coverage
Although the cost of life insurance and its coverage depend on many factors, some of the most significant ones are:
1. Age of the policyholder
2. Health conditions – both current and history
4. Smoking and drinking habits
5. Type of insurance policy
6. Claim history
In this article, you have learnt about the various Insurance policies in India. This will greatly help you decide on the best Insurance company that is both affordable and cheap, and cover yourself, business or family. If you have any question or feedback, feel free to comment below. You can read other insurance articles here.