Type Of Insurance
There are two broad types of insurance
- Life Insurance
- General Insurance
What is Life Insurance?
Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is loss of income to the household.
Though human life cannot be valued, a monetary sum could be determined based on the loss of income in future years. Hence, in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a 'benefit'. Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.
Why Life Insurance is required?
Let's proceed on the assumption that you're taking out an individual construction loan. Such loans, which can be tough to get without a previous banking history because of the lack of collateral (a finished home),
- To ensure that your immediate family has some financial support in the event of your demise
- To finance your children's education and other needs
- To have a savings plan for the future so that you have a constant source of income after retirement
- To ensure that you have extra income when your earnings are reduced due to serious illness or accident
- To provide for other financial contingencies and life style requirements
Who needs Life Insurance?
Primarily, anyone who has a family to support and is an income earner needs Life Insurance. In view of the economic value of their contribution to the family, housewives too need life insurance cover.
How much Life Insurance is needed?
The amount of Life Insurance coverage you need will depend on many factors such as:
- The number of dependants you have
- What kind of lifestyle you want to provide for your family in your absence
- The amount you need for your children's education
- Your investment needs
Types Of Insurance
Life Insurance
- Term Life
- Endowment policy
- Unit Linked Insurance (ULIP)
- Money Back Plans
- Pension Plans
- Child Protection Plans
General Insurance
- Motor
- Health
- Fire
- Travel
- Marine
Life insurance can be classified into various types
| Plan | Key feature |
|---|---|
| Term plan ( pure risk cover / or life coverage ) |
|
| Endowment policy (insurance cover life + Investment saving) |
|
| Unit – linked insurance (ULIP) (Insurance + investment benefit) |
|
| Pension/ retirement plans |
|
| Child Protection Plan |
|
GENERAL INSURANCE
A general insurance is a contract that offers financial compensation on any loss other than death A general insurance compensates you for financial loss due to liabilities related to your house, car, bike, travel etc.
Types of General Insurance
Motor insurance
Motor insurance includes insurance policies like car insurance two Wheelers insurance covers all damages and liability to the vehicle. Motor insurance has been made mandatory by the government for your safety and the safety of others.
Health Insurance
Health insurance is a type of insurance coverage that pays for medical, surgical expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury or pay the care provider directly.
Fire Insurance
Fire insurance is property insurance that covers damage and losses caused by fire. The purchase of fire insurance in addition to homeowner or property Insurance helps to cover the cost of replacement, repair or reconstruction of property, above the limit set by the property insurance policy.
Travel Insurance
Travel insurance is insurance coverage for risks associated with traveling such as loss of luggage, delays, and death or injury while in a foreign country or with in India.
Marine Insurance
Marine insurance covers the loss or damage of ships, cargo, terminals and any transport by which the property is transferred acquired, or held between the points of origin and the final destination.