Buying any type of insurance is one of the most significant financial choices, but only 10% of Indians are covered, believe it or not. Despite IRDA’s various reforms in the insurance industry and the introduction of different types of insurance in India, the study shows that only 2 out of 10 Indians buy an insurance cover.
But why is that so important? Well, no matter how much you earn, no one knows what the future holds. Many people die prematurely every year from illness or accidents. Due to this, many fail to pay their expenses. Be it medical expenses, repair expenses, impairment losses, etc.
If you happen to be the only breadwinner in your family, it could have devastating consequences for your loved ones — their ability to pay household expenses, debts, and maintain their standard of living.
The least you can do, therefore, is to secure the financial future of your family by purchasing any type of insurance policy.
Insurance is an agreement between two parties i.e. the insurer and the insured. In this, the insurance provider agrees to fix the insured’s damages on the case of any contingency.
The incident that triggers an accident is contingency. It could be the policyholder’s death or property damage.
The interpretation can be a contingency since there is ambiguity about the event’s happening. The policyholder charges a premium in exchange for the insurer’s guarantee.
While you cannot prepare for contingencies arising from these accidents in the future, a different type of insurance policy provides a sense of protection to mitigate financial risk from catastrophic events.
India has various types of insurance schemes. Although maximum coverage is important, too much coverage can be detrimental.
For certain instances, such as your emergency fund or retirement saving, spending too much money on the insurance policy could make you financially vulnerable. How do you know what types of insurance are important, and what is superfluous?
Learning the different types of insurance policies available in India just doesn’t help. You need to learn how each of those plans works.
You may not be able to secure your finances, as well as the financial well-being of your family members, without sufficient information about each type of insurance policy.
Read on to discover what you need to know about the various type of insurance plans.
Life Insurance policy refers to a scheme or covers whereby the policyholder guarantees his / her family members’ financial independence upon the death of a sole earning member of the family.
In such a situation your death will devastate the whole family financially. Life insurance policy ensures that such a thing will not happen by supplying relatives with financial support in case you die.
There are different types of life insurance policy available in India:
Term Plan-The The death benefit from a term plan is only available for a given time, e.g. 20 years from the date of purchase of the policy.
Whole Life Insurance-As the name implies, these plans offer insurance protection for an individual’s entire life, rather than a defined term. Many insurers can limit the entire term of the life insurance to 100 years.
Endowment Fund — Endowment plans are life insurance policies where a part of the premiums go to the death benefit and the remainder is invested by the provider of the insurance.
Money-Back-These plans reimburse a certain amount of the amounts covered by the contract at regular intervals. This is called survival benefit.
Unit Related Insurance Policies -Similar to endowment schemes, some of the insurance premiums go towards investing in mutual funds, while the rest goes towards the death benefit.
Health insurance refers to a form of general insurance. This offers financial assistance to policyholders when they require medical attention. Also, some policies often cover the cost of care received at home, before or after release from hospitalization.
TYPES OF HEALTH INSURANCE:
Family Floater Insurance-These plans allow you to take advantage of health benefits for the entire family without having to buy separate coverage for each member.
Generally, under this plan, husband, wife, and two of their children are allowed health cover. There is also individual health insurance available for one.
Critical Illness Protection-These is comprehensive insurance policies that offer significant financial coverage when serious medical diseases are reported to the policyholder. These plans include a lump-sum payment for such a diagnosis.
Senior Citizen Health Insurance-As the name implies, these plans are primarily for people 60 years of age and over.
Maternity Health Benefits-These plans cover pre-natal, post-natal and childbirth stages of medical expenses. It protects both the mother and the new-born.
This insurance applies to plans that offer financial aid in the event of car or bike incidents. It can be used for three motorized vehicle types i.e. car, bikes, and commercial vehicles.
TYPES OF MOTOR INSURANCE POLICIES:
Third-Party Responsibility-This is India’s most common form of vehicle insurance cover. It is the minimum mandatory provision for all owners of vehicles, as set out in the Motor Vehicles Act.
Such insurance policies only cover the financial responsibility of the third party affected by the incident, ensuring that it does not cause you legal trouble. Nevertheless, they do not provide any financial aid to repair the vehicle.
Comprehensive coverage– comprehensive insurance policies provide greater protection and reliability. Aside from covering third party risks, these policies often cover the costs incurred for fixing the damages to the policyholder’s car due to an accident.
One may even apply for multiple add-ons on their robust auto insurance policy that will make it better-rounded
Own Damage Cover– available only for two-wheeler or car after September 2018, you are entitled to use such a scheme. It must be a brand-new vehicle and not a second hand one. You should also note that even if you already have a third-party motor insurance policy in place, you will enjoy this standalone own risk cover.
Travel insurance will reimburse you or pay you for any financial losses resulting from medical and non-medical emergencies during your trip abroad or within the country.
Home Holiday Coverage-Your house remains unguarded and vulnerable while you fly with your relatives.
Burglary risks are often high and can result in substantial losses. Fortunately, you are often financially protected from these incidents with home holiday insurance programs, which are also included within travel policies.
Bite-sized insurance policies refer to sachet insurance plans which reduce your financial liability for a very limited period, generally up to one year.
Such type of insurance policies allows you to protect your assets from particular harms or risks.
For example, specific bite-sized insurance may offer Rs. 1 Lakh accidental cover for a year. When you think you may be especially vulnerable to accidental injury, you may choose this policy.
It has become imperative to ensure the system because of the growing price of cell phones and their many applications today.
In case of accidental injury, mobile insurance helps you to recover the money that you spent on fixing your phone. Mobile insurance plans are particularly advantageous for those with a premium smartphone
Any building or immovable structure can be covered by insurance policies for assets. It can either be your place of residence or commercial space.
If any harm occurs to such properties, the insurance agent has the right to demand financial assistance. Keep in mind that a package like this also offers financial security for the material within the estate.
This type of insurance policy is available for home, shop, commercial estate, and building.
You should consider purchasing the necessary types of insurance above. These are the most important types of insurance which provide enormous financial support for very realistic scenarios.