types of insurance in india

Types Of Insurance in India

Friends, you must have heard about insurance many times, but what is insurance to all of you? how many types of insurance are there? as well as why to insure? Wouldn’t know about it. Today we are going to know about all the things in detail. Along with this, you are also going to give some insurance information.

Many times you go to buy some car, or if you go to buy some expensive thing, then you are told about that insurance, now what is this insurance after all? And is it so important to get insurance, today we are going to tell you in detail about it? Also, we will tell you what are the advantages and disadvantages of having insurance.

The most important thing in your life is your family, you all want to see your family happy. There are a variety of life, health, and general insurance policies available in India that provide comprehensive financial protection to your loved ones and yourself. But before choosing any insurance policy, it is very important to get some information about it.

Table of Contents

What is Isurance?

The meaning of insurance is to protect you from the dangers that come into your life. You have optional insurance to cover the risks associated with life and properties. Also, before buying something, it is also important to take care of that thing. But you should also be told about why you should have insurance and how many types of insurance are there.

Insurance is a legal agreement between two properties, i.e. the insurance company and the person insured. According to this agreement, when a person gets insurance from the insurance company, then the insurance company gets the loss done to that person in the future.

How does insurance work?

While taking insurance, a fixed amount is charged from an individual which is called a premium. If the person suffers any kind of loss after taking the premium, then the insurance company gets his loss compensated. Ex. Like you get a house or car insured, then after its breakdown, that person is given compensation according to the terms and conditions.

Types of Insurance in India

Types of Insurance india

There are 2 types of Insurance.

  1. Life Insurance
  2. General Insurnace

But nowadays you hear the names of many types of insurance, so let’s know about all the insurances.

1. Life Insurance

Life Insurance

The person who gets his insurance done suddenly dies, then his family has the status of financial help. The importance of this life insurance is increased when a key person in the house dies and he is the one who takes care of the financial security of the family. So in such a situation, when that person is not there, that person gets financial support. That is why life insurance must be done so that even when you are not there, your family remains financially strong.

If you want to keep your family safe, then you must get life insurance. Because if something happens to you and you are the chief in your house, then your family gets financial help.

  • Term Life Insurance
  • Whole Life Insurance
  • Endowment Plans
  • Unit-Linked Insurance Plans
  • Child Plans
  • Pension Plans

Term Life Insurance Plans

Term insurance is the purest and most affordable form of life insurance in which, you can opt for a high life cover for a specific period. You can secure your family’s financial future with a term life insurance plan by paying a low premium (term insurance plans generally do not have any Maturity value, and thus, offer lower rates of a premium than other life insurance products.)

If anything happens to you within the policy period, your loved ones would receive the agreed Sum Assured as per the payout option chosen (some term insurance plans offer multiple payout options as well)

Whole Life Insurance Plans

Whole life insurance plans, also known as ‘traditional’ life insurance plans, provide coverage for the entire life of the insured individual, as opposed to any other life insurance instrument that offers coverage for a specific number of years.

While a whole life insurance plan offers to pay a death benefit, the plan also contains a savings component, which helps accrue a cash value throughout the policy term. The maturity age for a whole life insurance policy is 100 years. In case, the insured individual lives past the maturity age, the whole life plan will become matured endowment. 

Endowment Plans

Endowment plans essentially provide financial coverage to the policyholder against life’s uncertainties, while allowing them to save regularly over a certain period. Upon maturity of the endowment plan, the policyholder receives a lump sum amount if he or she survives the policy term.

If anything happens to you (as Life Insured), the life insurance endowment policy pays the complete Sum Assured to your family (beneficiaries)

Unit-Linked Insurance Plan (ULIP)

Unit Linked Insurance Plans are types of insurance policies that offer both investment and insurance benefits under a single policy contract. A portion of the premium that you pay towards a Unit Linked Insurance Plan is allocated to a variety of market-linked equity and debt instruments.

The remaining premium contributes towards providing the life cover throughout the policy tenure. ULIPs allow the flexibility to choose the allocation of premium into different instruments as per your financial requirements and market risk appetite.

Child Plans

Child plans are types of life insurance policies that help you financially secure your child’s life goals such as higher education and marriage, even in your absence. In other words, child plans offer a combination of savings and insurance benefits that aid you in the financial planning for your child’s future needs at the right age.

The sum of money received on Maturity can be used to fulfill the financial requirements of your child.

Pension Plans

A pension plan, also known as a retirement plan, is a type of investment plan that aids you in accumulating a portion of your savings over an extended period. Essentially, a pension plan helps you deal with financial uncertainties post-retirement, by ensuring that you continue to receive a steady flow of income even after your working years are over.

In other words, a pension plan allows you to create a financial cushion for your life post-retirement, in which you contribute a specific amount of money regularly until your retirement. Subsequently, the accumulated amount is given back to you as an annuity or pension at regular intervals. 

2. General Insurance

General insurance policies are one of the types of insurance that offer coverage in the form of a sum assured against the losses incurred other than the death of the policyholder. Overall, general insurance comprises different types of insurance policies that offer financial protection against losses incurred due to liabilities such as bike, car, home, health, and similar. These various types of General Insurance Policies include: 

Health Insurance

Health insurances are types of insurance policy that covers the expenses incurred due to medical care. Health insurance plans either pay or reimburse the amount paid towards the treatment of any illness or injury. Different types of health insurance cover varied medical care expenses.

It usually offers protection against:

a) Hospitalization

b) Treatment of critical illnesses

c) Medical bills post hospitalization

d) Daycare procedures

There are a few types of health insurance plans that also cover the cost of resident treatment and pre-hospitalization expenses. The rising costs of healthcare in India Are making health insurance a necessity. Different types of health insurance plans available in India include:

1) Individual Health Insurance: Offers coverage to only an individual

2) Family Floater Insurance: Allows your entire family to get coverage under a single plan, which usually covers husband, wife, two children

3) Critical Illness Cover: Specialized types of health insurance that offer coverage against various life-threatening illnesses like stroke, heart attack, kidney failure, cancer, and similar others. Policyholders get a lump sum amount on the diagnosis of a critical illness.

4) Senior Citizen Health Insurance: These types of insurance plans cater to all individuals above 60 years of age

5) Group Health Insurance: Offered by an employer to its employee

6) Maternity Health Insurance: Covers medical expenses for prenatal, post-natal, and delivery stage, offering protection to both the mother and the newborn

7) Personal Accident Insurance: These types of insurance plans cover financial liabilities arising due to accidental injuries, disability, or death

Motor Insurance

Motor insurances are types of insurance that offer financial assistance in case your bike or car gets involved in an accident. Various types of Motor insurance policies in India include:

1) Car Insurance: Individually owned four-wheelers are covered under this plan. Different types of car insurance – third-party insurance and comprehensive cover policies.

2) Bike Insurance: These are types of motor insurance where individually owned two-wheelers are covered against accidents.

3) Commercial Vehicle Insurance: One of the typesof motor insurance, which offers coverage to any vehicle used for commercial purposes

Home Insurance

As the name suggests, a home insurance policy offers comprehensive protection to the contents and structure of your house against any physical destruction or damage. In other words, home insurance will provide coverage against any natural and human-made calamity, such as fire, earthquake, tornado, burglaries, and robbery.

Different types of home insurance policies include:

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 type 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

Fire Insurance

Fire insurance policies are different types of insurance coverages that compensate any losses incurred due to a fire breakout with a sum assured. These types of insurance policies usually provide a significant amount of coverage to help both individuals and companies to reopen their places after incurring extensive damage due to fire. These types of insurance covers war risk, turmoil, riots losses as well.

Different types of fire insurance in India are –

1) Valued policy

2) Specific Policy

3) Floating Policy

4) Consequential Policy

5) Replacement Policy

6) Comprehensive Fire insurance policy

Travel Insurance

As the name suggests, travel insurance is a type of financial protection that protects you and your loved ones while you are visiting any place in India or abroad. Whether you are traveling solo or with your loved ones, the travel insurance coverage will help ensure that you have a peaceful journey.

The travel insurance policy coverage takes care of any issues that you may face during your trip such as loss of baggage, flight cancellations, loss of passport, personal and medical emergencies. Different types of travel insurance policies include:

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 traveling alone

4) Student Travel Insurance: If you are going abroad for further studies

5) Senior Citizen Travel Insurance: For senior citizens, aging between 60 to 70 years

6) Family Travel Insurance: For any family vacations

Tax Benefits of Various Types of Insurance

Amount paid toward the premium for different types of life insurance plans is tax-deductible

1. Under Section 80C of income tax 1981, the premium payable towards all types of life insurance plans is tax-deductible up to Rs 1.5 lakh

2. Under Section 80D of income tax 1981, the premium payable towards all types of health insurance plans is tax-deductible, subject to a maximum of Rs 25,000 for self, wife, and children and an additional 25,000 for parents having age below 60 years (the tax savings can go up to Rs 50,000 for senior citizens individual and 50000 if parents are senior citizens. Total deduction can go up to 1Lakh)

Source: Maxlifeinsurance.com MeixMMMaxinsurance

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