Types Of Insurance In India

Types of Insurance in India

It is a known fact that life can be very unpredictable especially when it comes to expenses. Someone who regularly goes to the gym could suddenly collapse on the floor with a heart attack. A regular driver could suddenly crash into a tree. Everyone feels that nothing will happen to them until it happens. For times like these, insurance companies have been up and running to ensure that people stay financially stable and can deal with situations. They act as a safety net for people during crisis periods. This article will help understand the different types of insurance available in India. 

What Is Insurance?

It’s a contract between an individual or a company and the insurer. This contract states the insurance company would come in to help out the other party in times of need. In the face of any unforeseen event, they provide financial protection which is the need of the hour. The sum assured is already fixed beforehand along with the premium. The individual or a company (the insured), pays their premiums to the insurance company regularly. In return, the insurance company (the insurer) steps in whenever required. The contract between these two is known as the insurance policy.

Types Of Insurance

In India, several options are available in the market offered by different insurance companies. Most of these are divided into two categories – general insurance and life insurance. There are a few sub-categories under these too. Let’s look at them one by one.

General Insurance

A general insurance policy is a contract between a policyholder and the insurer. Here the insurance company protects the insurer from events like fire, theft, burglary, or any such unfortunate event. Often confused with life insurance, this type of insurance covers non-life assets. Investing in these shouldn’t be confused with investments or savings. Here, a lumpsum premium amount is paid with an annual contract, and the sum assured is given in case of an eventuality. Different types of general insurance are as follows –

  • Health Care Coverage

Health insurance covers the charges incurred due to medical care. Here either the entire expense of the hospital is directly paid by them or is later reimbursed. Different types of expenses are covered in health insurance. Most insurance plans cover hospitalisation, treatment of critical illness, medical bills post-hospitalisation, and daycare procedures.

The insurer needs to ensure that all the terms and conditions are agreed upon beforehand. This should include confirming the things that are covered and excluded in the plan, pre-existing conditions, and waiting period. Before buying a policy, be sure about the kind of plan that would be more suitable – a single-owner policy or a family plan. Post 50 years of age, most of the policies require several medical tests and that’s why one must get them as soon as possible.

  • Automobile/Motor Insurance

As per the Motor Vehicle Act of 1988, it is mandatory to have motor insurance for anyone who owns a vehicle. This insurance covers the insurer’s vehicle (any vehicle) from any damage caused by accident, fire, or natural calamities. All the damages are paid by the insurance company. Within this, there are three sub-categories as well.

The first one is mandatory insurance to have for someone who owns a vehicle and that is third-party insurance. Simply put, this insurance covers injury or death caused to a third party by the said person’s vehicle as well as damages caused to property. The next sub-category is ‘Own Damage Car Insurance Policy’, where damages caused due to accidents like fire, theft, etc. are covered. The third sub-category is called ‘Comprehensive Car Insurance Policy’. This is a combination of the previous two policies.

  • Insurance For Travel

As the name states, this insurance is for when someone is traveling within or outside the country. There are a few different types of travel insurance too. Single-trip insurance is used when a person is covered by the company for a travel duration that is within 180 days. The annual multi-trip insurance covers every trip that is made within a year. For students going abroad to study, student travel insurance is used while for the elderly (only for those above 60), senior citizen travel insurance is available.

  • Property Insurance

This type of insurance covers the entire home along with its belongings. It doesn’t matter if the insurer is a tenant or the owner, insurance companies provide financial protection in case of theft, fire, flood, earthquake, etc. 

  • Other Types Of General Insurance

Commercial insurance helps a person against losses incurred due to business. Asset insurance helps one cover and protect their assets like electronic gadgets. Farmers can opt for crop insurance to save them from major financial loss. 

Life Insurance

This type of insurance covers the insured in events like death or disability. The individual pays a premium at fixed intervals of time and in return, the company pays the beneficiary a defined benefit of the product once it matures. The most basic life insurance is called the ‘Term Life Insurance’ which is for a fixed term and with a fixed premium. The insurer gets the lowest premium on such insurance policies and gets a big cover as well. Once the policyholder dies, the nominee gets the entire sum assured. Many insurance companies give the option for payout like lumpsum, staggered, and fixed monthly payout. The insurer won’t get the payout if they live beyond the term. 

Another type of insurance is ‘Whole Life Insurance’ which is not for a fixed term but for an entire lifetime. It matures at the time of death of the insurer or after 100 years. Endowment plans double down as insurance as well as investment. Pension plans help the insurer during the latter stage of their life. One can do it by investing a large amount or by paying a premium over a certain period.

A child plan helps the insurer plan for the future of their children and offers financial protection in case of unexpected events. It has the features of both investment and insurance. Once the insurance policy matures, a lumpsum amount is given to the insurer which could be used for the child’s tuition fees or weddings. Life insurance is one of the best investments one could make on themselves.

Summing Up

India has a wide range of insurance for every possible situation that could take place in a person’s life. They provide a sort of safety net that always gives a person assurance that they are ready to face any challenges thrown at them. Right from health insurance to vehicle insurance to gadget insurance to insuring a kid’s future, there are multiple insurances to plan a secure life.

 

FAQs

What Is The Basic Concept Of Insurance?
The basic concept of insurance is that an insurer will pay a small amount regularly to protect themselves from a huge unexpected loss.

What Are The 2 Basic Types Of Insurance?

While there are many different types of insurance, all of them are categorised into two major sides: general and life insurance.

What Is A Premium In Insurance?

A premium is the amount that is paid periodically to keep an insurance policy active. 

Call Us

Branch Locator