Modules for Beginners
All about insurance
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What all can I insure?
An insurance plan allows you to financially protect yourself and your family from contingencies and untoward incidents. Contrary to popular opinion, there are multiple types of insurance policies, each one designed for a different purpose. And this is what we’re going to be looking at in this chapter. Here’s a look at the different types of insurance that you can avail in India.
Insure your life with life insurance
Life insurance is probably one of the most popular types of insurance policies. Under life insurance, the nominee or the policyholder’s family will be compensated financially by the insurance service provider in the event of the policyholder’s death during the tenure of the plan.
Life insurance can be subcategorized into multiple different types. Here’s a quick look at a few of them.
Term life insurance
This is by far the most basic and the most affordable of life insurance plans. Term life insurance provides only death benefits and does not offer any maturity benefits.
Whole life insurance
Unlike other forms of life insurance that are only offered for a specific tenure, whole life insurance plans are designed to cover an individual for their entire life (up to 99 years).
Endowment plans are life insurance plans that combine the aspects of both insurance and investment. In addition to offering death benefits, these insurance plans also pay out maturity benefits.
Unit-linked insurance plans
While these insurance plans also offer both insurance and investment benefits, they invest in market-linked instruments such as shares and debt securities in the hope of generating a higher rate of return.
Pension plans are designed to offer policyholders a steady source of income after their retirement. In the event of the policyholder’s death, the entire purchase price will be paid out to the nominee.
Insure your health with health insurance
Health insurance plans are designed to protect you financially from the draining effects of medical treatment. These plans cover a wide variety of expenses that you incur towards treatment of a disease, ailment, or illness. By covering a major part of your medical expenses, health insurance plans reduce your financial burden significantly. A typical health insurance plan covers the following expenses -
- Hospitalization expenses
- Transportation expenses
- Daycare procedures
- Post hospitalization expenses
- Treatment expenses
Insure your vehicle with motor insurance
Motor insurance is another one of the most popular types of insurance. In fact, in India, possessing a valid motor insurance is mandatory according to the Motor Vehicles Act. These types of insurance plans offer financial compensation in the event of an accident involving your motor vehicle. A comprehensive motor insurance plan typically covers the following -
- Third party liabilities arising out of an accident involving your motor vehicle
- Damages to your motor vehicle as a result of an accident
- Damages to your motor vehicle as a result of a fire, explosion, theft, and natural disasters
- Loss of your vehicle due to theft, natural disasters, or calamities
Insure your house with home insurance
This is one of the least popular types of insurance in India. In the event of any damage to your house, the cost of repairing and restoring it to its original condition can be extremely expensive. Here’s where a home insurance plan can help. It protects you from the cost of repairing physical and structural damages to your house and the contents of your house. A typical home insurance policy covers the following -
- Damages to your home and its contents arising out of man-made calamities and disasters such as fires, burglaries, explosions, and riots
- Damages to your home and its contents arising out of natural calamities and disasters such as earthquakes, tornadoes, floods, and storms
Insure your trips with travel insurance
Of late, travel insurance plans are fast becoming very popular in India. These types of insurance policies are designed to offer financial compensation from contingencies and untoward incidents that you may face while traveling domestically or internationally. Here’s a quick look at the kind of expenses that travel insurance typically covers.
- Delay or loss of your baggage
- Delay or cancellation of flights
- Loss of your passport
- Medical emergencies while traveling
That’s it for this chapter. Hope you’re now aware of the different types of insurance policies that you can avail in India. In the next one, we’ll take a look at when you would need an insurance plan.
A quick recap
- Life insurance provides financial compensation to the policyholder’s family in the event of the policyholder’s death during the tenure of the policy.
- There are 5 major types of life insurance plans - term life insurance, whole life insurance, endowment plans, unit-linked insurance plans, and pension plans.
- Health insurance plans cover a wide variety of expenses that you incur towards the treatment of a disease, ailment, or illness.
- Motor insurance offers financial compensation in the event of an accident involving your motor vehicle.
- Home insurance plans cover the cost of repairing and restoring your damaged home to its original condition.
- Travel insurance offers financial compensation from contingencies and untoward incidents that you may face while traveling domestically or internationally.
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