Insurance is a way to manage your risk. When you buy insurance, you purchase protection against unexpected financial losses. The insurance company pays you or someone you choose if something bad happens to you. If you have no insurance and an accident happens, you may be responsible for all related costs.

Different Types of Insurance

Life Insurance and General Insurance are the two major types of insurance coverage. General Insurance can further be classified into sub-categories that clubs in various types of policies.

Just like the name suggests, life insurance is a cover for your life.   Life insurance can offer your family monetary relief in difficult times. This type of insurance provides financial security to the nominee (spouse, children, etc.), in case of an unfortunate event. It also serves as an investment tool in some cases. Here’s all you need to know about life insurance.

Types of Life Insurance

Term Life Insurance: In this plan, the policyholder is insured for a fixed term or period. If the insured person passes away within this term, then the nominee or family members of the insured can file a claim to the insurance company and receive the insurance money. With an increase in life expectancy, term plans these days offer policies that can cover you till you are 99 years old

Whole Life Insurance: Unlike term insurance, whole life insurance is not limited to a fixed term and provides coverage for life, i.e. throughout the lifespan of the policyholder. This plan only matures when the policyholder is not around anymore, after which the family members can claim the insurance amount. This policy cannot be claimed by the nominee, during the lifetime of the policyholder

Endowment Plan: Endowment plan is a life insurance policy that also acts as an investment tool. In the case of an endowment plan, the nominees can claim the life cover+ amount, if the insured person passes away during the term of the policy. The policyholder can also claim survival benefits if he/she outlives the term of the policy.
This plan is unique because it is a combination of insurance and investment. A part of the premium is reserved for the policy and the sum assured, while the other part is used for investments. On maturity, the nominee or the policyholder gets the sum assured as well as the bonus earned from investments

Unit Linked Insurance Plans: Commonly referred to as ULIPs, these plans provide growth of money as well as life cover+. With Unit Linked Insurance Plans, policyholders can enjoy the benefits of insurance and investment under a single plan. In ULIPs, the premium paid by the policy owner is divided into two parts. One part is used to invest in markets, just like in the case of mutual funds, and the other part is used to provide a life cover+

Critical Illness Plan: This plan can be used to cover the expenses of specific life-threatening diseases. Critical illness plans cover the costs of hospitalisation and diagnosis of the said disease. The policyholder can claim the sum assured if he/she suffers from a critical illness. The remaining balance can be availed upon the maturity of the policy, as per the terms of the policy.

Money-Back Plan: This plan works just like an endowment plan, but the beneficiary need not wait until the policy matures to get the returns. Money-back plans pay returns after fixed intervals within the policy term, for example, after 5 years or 10 years from the date of the purchase of the policy

In our busy lives, there is always a probability of unexpectedly becoming sick and requiring expensive treatments. There is always a slight chance that someone dear to us might be at the mercy of a chronic condition which requires long-term care. Fortunately, there is Health Insurance.

Health insurance ensures that undergoing long term treatment does not throw a family into dire financial straits. By paying a small amount of premium to the insurer, you can take a cover under a comprehensive health insurance plan. This will shield your savings from sudden shocks of medical treatments. In this way, health insurance acts as a protective cover for both savings and healthcare so that you and your beloved family can continue to enjoy their life.

Need for health insurance

There are 3 key reasons why you need health insurance.

You don’t have enough savings to pay for healthcare – Getting treated at a top healthcare facility is costly. People find it challenging to manage their finances when a family member gets diagnosed with a dreaded illness. Nearly 44% of India’s population is not covered by health insurance`. In such situations, people dip into their savings or take loans or sell assets to fund treatments. However, the smart thing to do, is to take a health insurance plan- this will help you to secure your finances and health at the same time.

Healthcare costs are rising fast – The rate at which medical costs are rising makes it necessary to have health insurance. Medical trend rate, i.e. the increase in per-person cost due to medical inflation. In India itself, this rate is expected to rise at double the inflation rate. The forecasted medical trend rate will be 10% in India, while inflation will be at 5%~. Cancer and diseases of the circulatory system remain the top two highest claims reported by most insurers, followed by gastrointestinal diseases and respiratory conditions. With a fixed benefit health insurance cover, you can effectively fight critical illnesses like cancer and conditions related to the heart.

Hospital costs includes various items – Treatment at hospital is not merely related to surgery. Medical check-ups, doctor fees, and medicines can account for a higher chunk than the actual hospitalisation expenses. Separately, there are diagnostic tests, post-operative care such as having a medical attendant at home, which also cost a lot. Add up all, to understand why medical treatment seems so expensive. Health insurance plans offer coverage for several types of ailments and surgeries. They also cover other aspects of medical treatment. Fixed benefit health insurance plans give the money without asking for a detailed description of all the aspects of treatment costs. It is paid upfront to the policyholder on the submission of first diagnosis report.

Benefits of health insurance

Money given upfront without medical bills – Fixed benefit health insurance plans pay the entire amount on diagnosis of the disease. Yes, there is no need to show actual proof of hospitalisation and treatment, like hospital bills or treatment bills. In this way, such health insurance policies offer full coverage for both, before and after hospitalisation expenses. There are no pre-specified durations/limits. If the policyholder is diagnosed with an ailment that is covered under the policy, the insurer will pay the money to the policyholder without asking any further questions.

Treatment at a facility of your choice – With proper health insurance, you can get treated anywhere in India and the world. If you have the right amount of health cover, you do not need to compromise with treatment. With the health insurance claim money, you can opt for treatment anywhere in the world as per your own wish and convenience.

High cover at low cost – Fixed benefit health insurance plans give high coverage amount for a comparatively lower premium. This saves you money and also allows you to remain worry-free even if diagnosed with a severe ailment. 

Fixed premium cost – Health insurance plans offer fixed benefits at a fixed premium. The premium amount in such special plans remains fixed for the entire duration of the policy. This means that your household budget is not put under any strain due to rising health insurance costs. Some plans even offer a discount on the first-year premium if you and your spouse are covered.

Tax benefits* – Fixed benefit health insurance plans offer tax benefits. If you pay the premium, you can avail deduction up to ₹ 25,000 from your taxable income on the health insurance premiums paid. This amount of benefit is available under Section 80D of the Income Tax Act if your age is less than 60 years. If you and your family members are all more than 60 years old, the maximum deduction available is of ₹ 50,000. The same benefit is applicable for premiums that you pay for your parents.

General Insurance provides cover to other aspects and assets in a person’s life, for example, health, car, travel, home, etc. This type of cover insures assets against theft or damage due to fires, natural calamities, accidents, man-made disasters like riots or terrorist attacks, etc. 

Types of General Insurance

Health Insurance: This is one of the most common types of general insurance and provides cover against medical emergencies and hospitalisation expenses. A person can choose between specific plans for certain types of ailments, like heart and cancer ailments, accidents, etc. There are different types of health insurance plans available in the market today. One can choose an individual cover or opt for a family cover for all the family members.

Home Insurance: Just like insuring health, one can also insure his/her house for a certain sum of money. Home insurance provides security against natural calamities like earthquakes, floods, riots, theft, etc., that can damage one’s home or its belongings. If a person suffers any loss due to any of these reasons, he/she can submit a claim to the insurance provider. After carefully assessing the extent of the damage, the insurance company will pay the insurance claim.

Travel Insurance: Travel insurance is specific to a trip and a person can get the insurance right before he/she starts the journey. This type of insurance provides security against the loss of baggage, delay or cancellation of flights, accidents or hospitalisation expenses, etc, during a trip. If a person meets with an unfortunate accident, or loses his/her baggage, he/she can claim travel insurance to cover these expenses.

Motor Insurance: Motor insurance secures vehicles and provides cover against damage due to accidents, theft, riots, terrorist attacks, or natural calamities like floods, cyclones, etc. Motor insurance is of two types:

Comprehensive Insurance: This includes a broader spectrum of things. Comprehensive motor insurance covers both the parties involved in an accident. It also provides cover against theft or damage due to factors like natural calamities, human-made disasters like riots, vandalism, and more.
Third-Party Insurance: This only provides cover to the third party involved in an accident. This type of insurance usually has a lower premium than comprehensive insurance.