Is there any Need of Insurance?
Life is full of unpredictability,
in life; any unexpected situation may come to your family's well-being. For
such scenarios, different types of life, health and general insurance policies
are available in market that offers financial protection to your family members
and yourself. At the same time, you can take for an insurance cover to protect
your assets and property. However, before purchasing an insurance policy, it is
important to understand the different types of insurance policies and then
choose the ones that fulfill your needs. And most important is there any need
for assurance.
Types of Insurance
Insurance is a legal contract between an individual and the
company, under which, the one party insurer promises to provide financial
coverage (assured) against contingencies for an amount (premium). The types of
insurance in market can be broadly divided into two categories:
|
General
Insurance |
|
Life
Insurance |
Types of Insurance Policies Available in Indian Market
1. General Insurance
Following are some of the types of general insurance
available in India:
|
Health
Insurance |
|
Motor
Insurance |
|
Home
Insurance |
|
Fire
Insurance |
|
Travel
Insurance |
2. Life Insurance
There are various types of life insurance. Following are the
most common types of life insurance plans available in India:
|
Term
Life Insurance |
|
Whole
Life Insurance |
|
Endowment
Plans |
|
Unit-Linked
Insurance Plans |
|
Child
Plans |
|
Pension
Plans |
General Insurance
General insurance policies are one of the types of insurance that offer coverage in the form of sum assured against the losses incurred other than the death of the policyholder. Overall, general insurance comprises different types of insurance policy that offer financial protection against losses incurred due to liabilities such as bike, car, home, health, and similar. These various general insurance types of 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 insurance policy cover varied
medical care expenses.
It
usually offers protection against:
|
Hospitalization |
|
Treatment of critical
illnesses |
|
Medical bills post
hospitalization |
|
Daycare procedures |
There
are various types of health insurance plans also cover the cost of resident
treatment and pre-hospitalization expenses. Increasing costs of healthcare in India
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, and two
children
3) Critical Illness Cover: Specialized types of health
insurance that offers coverage against various life-threatening illnesses like
stroke, heart attack, kidney failure, cancer, and similar others.
Policyholders get a lump sum amount on 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: This insurance type
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 get 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. The car insurance types include- third-party insurance and comprehensive cover policies.
2) Bike Insurance: These are types of insurance policy where individually owned two-wheelers are covered against accidents
3) Commercial Vehicle Insurance: This is one of the insurance types, 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, this insurance type 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 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
Fire Insurance
Fire
insurance policies are different types of insurance coverage that compensate
any losses incurred due to a fire breakout with a sum assured. These types of
insurance policy 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 insurance types cover 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 insurance policy, providing financial protection for you and your loved ones while you are visiting any place in India or abroad. Whether you are travelling 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
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 |
Life Insurance
Life insurance plans offer coverage against unfortunate
events like death or disability of the policyholder. Besides financial
protection, there are various types of life insurance policies that allow
the policyholders to maximize their savings through regular contributions into
different equity and debt fund options.
You can choose a life insurance policy to secure your
family's financial future against life's uncertainties. The policy coverage
comprises of a large amount, which is payable to your loved ones if anything
happens to you. With this insurance type, you have the flexibility to choose
the life insurance policy period, coverage amount, and payout option based on
the financial requirements. Different types of life insurance policy are as
follows:
|
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 among the types of insurance policy 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 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 types 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 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 policy 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. In this investment-cum-insurance type product, you have 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 insurance policy that helps 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 under this insurance type can be used to fulfill the financial requirements of your child.
Pension Plans
Pension plan, also known as 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 can be a type of insurance in India that 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 annuity or pension at regular intervals.
With Max Life Insurance, you can find comprehensive plans such as Max Life Smart Wealth Plan or Max Life Smart Secure plus Plan to fulfill your particular investment goals and keep your loved ones financially secure.
Tax Benefits of Various Types
of Insurance in India
Amount paid toward 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 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 upto 1Lakh)
Factors Defining Your Life
Insurance Coverage
Although Life insurance coverage and its premiums depend upon various factors, but some important ones are:
|
1. Age of the policyholder |
|
2. Health conditions – both current and history |
|
3. Occupation |
|
4. Smoking and drinking habits |
|
5. Type of insurance policy |
|
6. Claim history |
|
7. Location |
You read about different types of insurance that you can buy basis your needs and requirements. However, for further queries on various types of life insurance policies, you can contact Max Life Insurance. We offer multiple life insurance solutions under each category for you to choose the one that best suits you. Max Life Insurance claim-settlement ratio for FY 19-20 is 99.22% as per Annual Audited Financial FY 19-20. With our around the clock customer support services, you can get assistance to easily choose the one of the different types of life insurance plans provided by Max Life Insurance.
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