Different Types Of Insurance

"A family member with no insurance is a future liability in case of an accident or when they suffer a critical illness."

Henry David Thoreau

Types of Insurance

There are various types of insurance available in the market for individuals. As a good financial habit, ensure you have all types of insurance that apply to you, more importantly, with adequate coverage!:

• Health Insurance As the name suggests, it provides financial assistance in case of a medical emergency ( car accident, accidental fall, etc.) or when you require medical treatment (OPD surgeries, cardiac attack, etc.). They cover all expenses ranging from diagnostic tests, and ICUs to room charges. Various insurers have their specific terms and conditions, therefore it is very important to go through them carefully before purchasing a policy. In this day and age, where medical expenses can make you bankrupt, it is essential to make sure EVERYONE in the family has medical coverage. There are various types of health insurance available such as: Individual health insurance: This provides insurance coverage to only one person. Group health insurance: Entire family including parents can be covered under this policy Personal accident insurance: Some health insurance policies do not cover accidental insurance. Therefore if it is not covered by your insurer, kindly get it separately. Maternity health insurance: This type of insurance provides coverage during pre-natal, post-natal, and delivery stages. Both the baby and mother are covered under this policy. Critical illness cover: Some health policies do not cover critical illnesses like cancer, AIDS, etc. Under critical illness cover, the insurance company pays out a lump sum amount on the first diagnosis of the illness hence giving you financial support in time of need.
• Individual health insurance: This provides insurance coverage to only one person.
• Group health insurance: Entire family including parents can be covered under this policy Personal accident insurance: Some health insurance policies do not cover accidental insurance. Therefore if it is not covered by your insurer, kindly get it separately. Maternity health insurance: This type of insurance provides coverage during pre-natal, post-natal, and delivery stages. Both the baby and mother are covered under this policy. Critical illness cover: Some health policies do not cover critical illnesses like cancer, AIDS, etc. Under critical illness cover, the insurance company pays out a lump sum amount on the first diagnosis of the illness hence giving you financial support in time of need.
• Personal accident insurance: Some health insurance policies do not cover accidental insurance. Therefore if it is not covered by your insurer, kindly get it separately.
• Maternity health insurance: This type of insurance provides coverage during pre-natal, post-natal, and delivery stages. Both the baby and mother are covered under this policy.
• Critical illness cover: Some health policies do not cover critical illnesses like cancer, AIDS, etc. Under critical illness cover, the insurance company pays out a lump sum amount on the first diagnosis of the illness hence giving you financial support in time of need.
• Home Insurance By opting for home insurance, you can insure your house against loss of property due to fire, flood, burglary, an act of god, etc. You can also insure all household items by stating their value so you can have peace of find when you travel.
• Motor insurance Motor insurance covers both four-wheelers and two-wheelers. In case of theft of a vehicle or damage to a vehicle due to fire, flood, etc, the company pays you the IDV(Insured Declared Value) upfront. There are three types of motor insurance: Third Party Cover: The Motor Vehicle Act of 1988 makes it mandatory to have third-party insurance done on your vehicle. they pay the financial liability to a third party in case of any accident involving your vehicle. However, no financial assistance is provided for damage to your vehicle which is why this cover is usually the cheapest. Own Damage Cover: Under this cover, the insurer agrees to indemnify your vehicle of all damages. The cost which the insurance company pays you in case of damage to your vehicle varies from company to company. Hence, it is important to compare policies from different companies before purchasing auto insurance, seeking maximum advantages at the lowest cost. Comprehensive Cover: Under this cover, the insurer provides to pay for 100% of expenses involving your vehicle, right from the body to the engine. This feature is not available in its damage cover. This is the most expensive of the three because it covers 100% of the cost thereby ensuring you pay next to nothing to get your vehicle repaired. It should be noted that the majority of insurance companies only provide comprehensive coverage on vehicles less than 10 years old.
• Third Party Cover: The Motor Vehicle Act of 1988 makes it mandatory to have third-party insurance done on your vehicle. they pay the financial liability to a third party in case of any accident involving your vehicle. However, no financial assistance is provided for damage to your vehicle which is why this cover is usually the cheapest.
• Own Damage Cover: Under this cover, the insurer agrees to indemnify your vehicle of all damages. The cost which the insurance company pays you in case of damage to your vehicle varies from company to company. Hence, it is important to compare policies from different companies before purchasing auto insurance, seeking maximum advantages at the lowest cost.
• Comprehensive Cover: Under this cover, the insurer provides to pay for 100% of expenses involving your vehicle, right from the body to the engine. This feature is not available in its damage cover. This is the most expensive of the three because it covers 100% of the cost thereby ensuring you pay next to nothing to get your vehicle repaired. It should be noted that the majority of insurance companies only provide comprehensive coverage on vehicles less than 10 years old.
• Life Insurance This is the most important of all insurance policies and for a reason. In case of the untimely demise of the main income earner of the family, it gives an upfront financial payout to support your family which will go a long way in helping them sustain. Nobody can achieve financial freedom without getting life insurance. While there are different types of life insurance policies in the market presently (many more being launched each passing day with a new name!) we will here focus on the main two: Endowment plan: Here, the insured pays a hefty premium (for example, a premium of Rs. 40,000 yearly) for a policy of a lesser amount ( for example, Rs. 20,00,000 to Rs. 40,00,000) for the entire duration of the policy term (20 years, 25 years and so on). Here, the insurer gets Maturity benefit+Death benefit+bonuses after the policy if the policyholder is alive. However, in case of the untimely demise of the policyholder before the maturity of the policy, only the sum insured is paid out. The insured gets Maturity benefit+Survival benefit+bonuses at maturity of the policy if he/she is alive. However, in case of the untimely demise of the policyholder before the maturity of the policy, only the sum insured is paid out. Term Plan: In a term plan, the policyholder pays for each term (which is usually 1 year) for as long he/she wants the insurance coverage. Here the policy premiums are quite low because you only get paid in case of untimely demise. No payout is done at the end of the term. (which is around a maximum of 40 years). So basically, if you live long, you get paid nothing and in case of any unfortunate event, you are paid the sum insured which is usually far more than what you get in any endowment plan.
• Endowment plan: Here, the insured pays a hefty premium (for example, a premium of Rs. 40,000 yearly) for a policy of a lesser amount ( for example, Rs. 20,00,000 to Rs. 40,00,000) for the entire duration of the policy term (20 years, 25 years and so on). Here, the insurer gets Maturity benefit+Death benefit+bonuses after the policy if the policyholder is alive. However, in case of the untimely demise of the policyholder before the maturity of the policy, only the sum insured is paid out. The insured gets Maturity benefit+Survival benefit+bonuses at maturity of the policy if he/she is alive. However, in case of the untimely demise of the policyholder before the maturity of the policy, only the sum insured is paid out.
• Term Plan: In a term plan, the policyholder pays for each term (which is usually 1 year) for as long he/she wants the insurance coverage. Here the policy premiums are quite low because you only get paid in case of untimely demise. No payout is done at the end of the term. (which is around a maximum of 40 years). So basically, if you live long, you get paid nothing and in case of any unfortunate event, you are paid the sum insured which is usually far more than what you get in any endowment plan.
• Mobile Insurance We live in an age where a mobile phone costs up to Rs. 2,00,000! Therefore, it is prudent to take insurance for a device that you use almost daily and has a high probability of slipping out of your hands and getting damaged or simply being stolen!
• Travel Insurance We are living in a connected world, where, ever-expanding connectivity has encouraged traveling- both domestic and foreign. While we can only hope all trips are fun, sometimes due to bad luck we can end up in not-so-fun situations like- accidents, robbery, etc, where we are stuck in distant place with little or no help. Travel insurance not only provides financial assistance, but also arranges your stay and even your return safely back to your home!