There are a various types of insurance policies available in India. but so many confusion among people which insurance policy is good for them and their families. In this blog we tried to cover 5 types of insurance policies in india.
India has one of the fastest-growing insurance markets in the world. With rising incomes and growing awareness, more Indians are recognizing the importance of insurance.
Types of Insurance: Life Insurance
Life insurance provides financial protection for your family in case of untimely death. There are two key types of life insurance plans in India – term plans and whole life plans.
Term Life Insurance – This is the most basic and affordable form of life cover. Term plans provide life cover for a specified tenure, say 20 or 30 years. The policyholder pays regular premiums during the term. If death occurs during the term, the nominee gets the sum assured. If the policyholder survives the term, there is no payoff. There is also no cash value accumulation in the policy.
Whole Life Insurance – Also called traditional life insurance, these policies provide lifelong coverage as long as premiums are paid on time. Part of the premiums go into a cash value account that builds up over time. Policyholders can take loans against this cash value. On death, the nominee gets the sum assured plus any accumulated cash value.
The premiums for term plans are much lower than for whole-life plans for the same sum assured. High life cover at low cost makes term insurance ideal for most Indians seeking protection for their families.
Whole life plans are more suited to the wealthy who have surplus funds to invest and want insurance too.
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Types of Insurance: Health Insurance
With rising healthcare costs, health insurance is a must to cover hospitalization and surgery expenses. There are three key types of health insurance plans in India.
Indemnity Plans – This is the most common type of health insurance plan. It covers hospitalization costs up to the sum insured. Reimbursement is based on actual medical bills and hospital charges. Many indemnity plans also cover pre- and post-hospitalization expenses for defined periods.
Fixed Benefit Plans – These plans pay a fixed amount for certain treatments or procedures regardless of actual cost. For example, Rs.10,000 for a dialysis session. They provide access to cashless treatment through network hospitals.
Critical Illness Plans – These plans provide a lump sum payment on the diagnosis of a covered critical illness like cancer, heart attack, stroke, organ failure, etc. The payout helps manage treatment expenses.
A regular indemnity plan coupled with a critical illness plan is a good health insurance strategy. The regular plan covers unpredictable hospital costs while the critical illness plan provides funds for expensive specialized treatments.
Health insurance plans by LIC.
Types of Insurance: Motor Insurance
Motor insurance is mandatory in India for all vehicles. There are two types of motor insurance.
Third-Party Liability – This covers injury or damage caused by the vehicle to a third party – person, property, or vehicle. It is compulsory under the Motor Vehicles Act. Third-party cover is basic protection against legal liability.
Comprehensive Policy – This is an enhanced policy that covers its own damage in addition to third-party liability. It covers damage to the insured vehicle from natural and man-made causes like accidents, floods, earthquakes, theft, vandalism, riots, etc. Comprehensive policies have optional add-ons to expand coverage.
Third-party cover is a must for all vehicle owners. Comprehensive policies are recommended as they provide comprehensive protection for your vehicle.
Types of Insurance: Home Insurance
Home insurance covers your home building and contents against damage. There are two types of home insurance coverage.
Building Cover – This covers the physical structure of the home against risk events like fire, floods, earthquakes, natural disasters, riots, etc. It is generally calculated as a % of the cost of construction.
Contents Cover – This covers household goods inside the insured home against theft and damage. The contents sum insured is calculated based on the value of belongings like furniture, electronic items, and valuables.
Homeowners should opt for both building and contents cover for complete protection. Additional covers like alternative accommodation, valuables cover, and appliance protection can also be added.
Types of Insurance: Buyers’ Protection Plans
These niche insurance plans are designed to cover buyers against losses in various situations.
Purchase Protection – Covers online shoppers against damage, theft, or non-delivery of purchased products. Useful in the e-commerce boom.
Trade Credit Insurance – Protects businesses providing goods and services on credit terms against non-payment by buyers. Useful in B2B trade.
Pre-existing health insurance plans – Provide insurance against pre-existing diseases excluded from standard health plans. Helpful for mediclaim portability.
Renter’s Insurance – Covers belongings of those living in rented homes against theft and damage when living away from family.
Wedding insurance: Covers cancellation or disruption of wedding festivities due to unforeseen events. Gives peace of mind for elaborate weddings.
Filing Claims
Policyholders can file claims for any of the mentioned types of insurance directly or through agents for reimbursement of covered losses. The claims process involves intimation of loss, submission of documents, survey, investigation, and settlement. For smooth settlement, maintain records like policy documents, hospital bills, police reports, etc.
Claim settlement requirements.
Disclaimer
There are specialized types of insurance covers for different life stages and needs. Compare those different types of insurance plans in terms of premiums, coverage, exclusions, and claims process, and choose policies wisely. A good insurance portfolio provides a financial safety net and peace of mind.
