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8 Types Of Insurance Policies

Any unforeseen situation in life can hamper the well being of your family. For such scenarios, there are a variety of life, health and general insurance policies available in India that provide comprehensive financial protection to your loved ones and yourself. Also, you can opt for an insurance cover to protect your property and assets. However, before buying an insurance policy, it is imperative to understand the different types of insurance policies and then choose an insurance policy that suits your needs.

Insurance Types You Should Know 

Insurance is a legal agreement between an individual and an insurance company, whereby the insurer promises to provide financial coverage (sum insured) against contingencies for an amount (premium). The types of insurance in India can be broadly divided into two categories:

  • general Insurance
  • Insurance

Different   types of insurance policies available in India

Following are the types of insurance available in India:

1. General Insurance

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Following are some of the types of general insurance available in India:

  • health insurance
  • motor insurance
  • home insurance
  • fire insurance
  • travel insurance 

2. Life Insurance

There are many types of life insurance. Following are the most common types of life insurance plans available in India:

  • term life insurance
  • whole life insurance
  • endowment plans
  • Unit-Linked Insurance Plans
  • child plans
  • pension plans

Let’s take a closer look at the different types  of insurance policies:  

general Insurance

General insurance policies are one of the types of insurance that provide coverage in the form of sum insured against losses other than the death of the policyholder. Overall, general insurance includes various types of insurance policies that provide financial protection against damages caused by bike, car, house, health and similar liabilities. These different general insurance types of insurance policies include: 

health insurance

Health insurance is a type of insurance policy that covers expenses incurred due to medical care. Health insurance plans pay or reimburse the amount paid for the treatment of an illness or injury. Different types of insurance policies cover different medical care expenses.

It usually provides protection against:

a)   hospitalized

b)   treatment of serious diseases

c)   Medical bills after hospitalization

d)   Daycare Procedures

There are some types of health insurance plans that also cover the cost of resident treatment and pre-hospitalization expenses. The rising cost of health care in India is making health insurance a necessity. The different types of health insurance plans available in India include:

1)   Individual health insurance  : Provides coverage to only one person

2)   Family floater insurance  : Allows your entire family to get coverage under a single plan, which usually includes husband, wife, two children.

3)   Critical Illness Cover  : Special type of health insurance that provides coverage against various life-threatening diseases like stroke, heart attack, kidney failure, cancer and other similar diseases. The policyholders get a lump sum amount on diagnosis of critical illness  .

4) Senior Citizen Health Insurance  : This type of insurance plans cater to all persons above 60 years of age

5)   Group Health Insurance  : Provided by the employer to his employee

6)   Maternity Health Insurance:   This insurance type covers medical expenses for the antenatal, postpartum and delivery stages, providing protection to both the mother and the newborn.

7)   Personal Accident Insurance  : These types of insurance plans cover financial liabilities arising due to accidental injury, disability or death.

motor insurance

Motor insurance is a type of insurance that provides financial assistance in case your bike or car is involved in an accident. The different types of motor insurance policies in India include:

1)   Car Insurance  : Individually owned four wheelers are covered under this scheme. Car insurance types include third-party insurance and comprehensive cover policies.

2)   Bike Insurance:   These are the types of insurance policies where personally owned two wheelers are covered against accidents

3)   Commercial Vehicle Insurance:   It is one of the insurance types, which provides coverage to any vehicle used for commercial purposes

home insurance

As the name suggests, a home insurance policy provides comprehensive protection to the contents and structure of your home against any physical destruction or damage. In other words, this insurance type will provide coverage against any natural and man-made calamity, such as fire, earthquake, tornado, theft and robbery.

The different types of home insurance policies include:

1)   Home Structure / Building   Insurance – covers damage to the house structure during any calamity

2)   Public Liability Coverage   – Provides coverage against any damage to a guest or third party on the insured residential property

3)   Standard fire and special hazard policy   – against damages caused by fire outbreaks, natural disasters (eg, landslides, rockfalls, earthquakes, hurricanes, and floods), and antisocial man-made activities (eg, explosions, strikes) coverage. and riots)

4)   Personal Accident   – Provides financial coverage to you and your family against any kind of permanent dismemberment or sudden death of the insured, anywhere in the world.

5)   Burglary and Theft Insurance   – Provides compensation for stolen goods in case of theft or theft

6)   Contents Insurance   – Provides compensation for damage to furniture, vehicles, and other equipment in case of fire, theft, flood, or riots

7) Renters Insurance   – Provides you (as a tenant) financial protection against any damage to the personal property residing in the rented house

8)   Landlords Insurance –   Provides you (as a landlord) coverage against contingencies like public liability and rent loss

 

fire insurance

Fire insurance policies are different types of insurance coverage that cover any loss caused due to fire with sum assured. This type of insurance policy usually provides a significant amount of coverage to help both individuals and companies reopen their locations after extensive damage has been caused by a fire. These insurance types also cover war risk, upheaval, riot damages.

There are different types of fire insurance in India –

1)   Valuable Policy

2)   Specific Policy

3)   Floating Policy

4)   Consequential Policy

5)   Replacement Policy

6)   Comprehensive fire insurance policy

travel insurance 

As the name suggests, travel insurance is a type of insurance policy, which provides financial protection to you and your loved ones while traveling to any place in India or abroad. Whether you are traveling alone or with your loved ones, travel insurance coverage will help ensure that your trip is a peaceful one.

Travel insurance policy coverage takes care of any problems you may come across during your travels such as loss of baggage, flight cancellations, loss of passport, personal and medical emergencies. The different types of travel insurance policies include:

1)   Domestic Travel Insurance: Within the Country

2)   International Travel Insurance: For any travel or holidays outside India

3)   Individual Travel Insurance: If you are traveling alone

4)   Student Travel Insurance: If you are going abroad for further studies

5)   Senior Citizen Travel Insurance: For Senior Citizens, whose age is between 60 to 70 years

6)   Family Travel Insurance: For any family vacations

Insurance

Life insurance plans provide coverage against unfortunate events like death or disability of the policyholder. Apart from financial protection, there are different types of life insurance policies that allow policyholders to maximize their savings through regular contributions to various equity and debt fund options.

You can choose a life insurance policy to secure the financial future of your family from the uncertainties of life. Policy coverage covers a large amount, which is payable to your loved ones if anything happens to you. With this type of insurance, you have the flexibility to choose the term of the life insurance policy, coverage amount and payment options based on the financial needs. The different types of life insurance policies are as follows:

  • term life insurance
  • whole life insurance
  • endowment plans
  • Unit-Linked Insurance Plans
  • child plans
  • pension plans

term life insurance plan 

  • Term insurance is the purest and most economical of the insurance policy types, wherein you can opt for a higher life cover for a specific term. You can secure the financial future of your family with a term life insurance plan by paying lower premiums (Term insurance plans usually have no maturity value, and thus, lower premiums as compared to other life insurance products) rates.)
  • If something happens to you within the policy term, your loved ones will receive the agreed sum assured as per the payment option chosen (some term insurance types also offer multiple payment options)

Whole Life Insurance Plans 

  • Whole life insurance plans, also known as ‘traditional’ life insurance plans, provide coverage for the entire life of the insured, unlike any other life insurance instrument that provides coverage for a specific number of years. 
  • While a whole life insurance plan offers to pay a death benefit, the plan also has a savings component, which helps in earning cash value throughout the policy term. The maturity age of whole life insurance policy is 100 years. If the Life Assured survives beyond the maturity age, the Whole Life Plan will become a Mature Endowment.

 

endowment plans

Endowment plans essentially provide the policyholder with financial coverage against the uncertainties of life, while allowing them to save regularly over a specified period. On maturity of the endowment plan, if the policy term survives, the policyholder receives a lump sum amount.

If something happens to you (as the life insured), the life insurance endowment policy pays the entire sum assured to your family(s)

Unit-Linked Insurance Plan (ULIP)

Unit linked insurance plans are a type of insurance policy that provides both investment and insurance benefits under a single policy contract. A portion of the premium that you   pay for a unit linked insurance plan  is allocated to a variety of market-linked equity and debt instruments.

The remaining premium contributes to providing life insurance throughout the policy term. In this investment-cum-insurance type of product, you have the flexibility to choose the allocation of premiums across different instruments as per your financial requirements and market risk appetite. 

 

child plans

Child plans are a type of insurance policy that helps you to financially secure your child’s life goals like higher education and marriage even in your absence. In other words, child plans offer a combination of savings and insurance benefits that help you plan financially for your child’s future needs at the right age.

The amount received on maturity under this type of insurance can be used to meet the financial needs of your child.

pension plans

A pension plan  , also known as a retirement plan, is a type of investment plan that helps you accumulate a portion of your savings over an extended period.

Essentially, a pension plan helps you deal with post-retirement financial uncertainties, by ensuring that you continue to receive a steady stream of income even after your working years.

In other words, a pension plan can be a type of insurance in India that allows you to create a financial cushion for your post-retirement life, in which you contribute a specific amount regularly till your retirement. . Thereafter, the accumulated amount is returned to you in the form of annuity or pension at regular intervals. 

With Max Life Insurance, you can find comprehensive plans like Max Life Smart Wealth Plan or Max Life Smart Secure Plus Plan to meet your specific investment goals and keep your loved ones financially secure. 

Tax benefits of different types of insurance in India 

 

The amount paid towards premiums for different types of life insurance plans is tax-deductible

1. Under section 80C of Income Tax 1981, the premium payable for all types of  life insurance plans  is tax-deductible up to Rs.1.5 lakh

2. Under Section 80D of Income Tax 1981, premium payable for all types of health insurance plans is tax-deductible, subject to a maximum of Rs 25,000 for self, wife and children and additional for parents below 60 years of age 25,000 is under. The tax savings can go up to Rs 50,000 for senior citizens and Rs 50,000 if the parents are senior citizens. Total deduction can go up to 1 lakh)

 

Factors that define your life insurance coverage

Although life insurance coverage and its premiums depend on various factors, some important ones are:

1.   Age of the Policyholder

2.   Health status – both current and history

3.   Profession

4.   Habit of smoking and drinking

5.   Type of Insurance Policy

6.   Claim History

7.   Location

You have read about the different types of insurance that you can buy based on your needs and requirements. However, for more queries on different types of life insurance policies, you can contact Max Life Insurance. We offer multiple life insurance solutions under each category for you to choose the most suitable option for you. The maximum life insurance claim-settlement ratio for FY 19-20 is 99.22% as of the annual audited FY 19-20. With our round the clock customer support services, you can easily get help choosing one from the wide variety of life insurance plans offered by Max Life Insurance.

Frequently Asked Questions (FAQs)

Q. What are the different types of insurance in India? 

A.   Following are the types of insurance in India:

1. General Insurance

Following are the different types of general insurance in India:

  • health insurance
  • motor insurance
  • home insurance
  • fire insurance
  • travel insurance

2. Life Insurance

There are several types of life insurance available in India:

  • term insurance
  • Term insurance with return of premium
  • Unit Linked Insurance Plans
  • endowment plan
  • whole life insurance
  • group life insurance
  • child insurance plans
  • retirement plans

Q. What is insurance? 

A.   Insurance is a legal agreement between an individual and an insurance company. The insurer or insurance company promises to provide financial coverage or sum insured for contingencies. In order to get insurance, individuals or customers have to pay the insurance premium, which depends on various factors.

Q. Should you consider the claim settlement ratio before buying insurance and choosing an insurance company? 

A.   Yes, the claim settlement ratio is an important factor before choosing an insurance type or an insurer. The claim settlement ratio or claim paid ratio is the total number of claims settled by an insurance provider against the total number of claims made by the customers. You should check the claim settlement ratio to ensure that you or your nominee does not face any problem at the time of claim settlement.

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