Insurance is a tool that provides us with much-needed security against the unknown. Selecting the appropriate type of insurance policy with the appropriate quantity is one wise decision we must make to protect our possessions or financial stability.
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1) Life Insurance |
a) Term b)Endowment c) Whole Life d) ULIPs e) Child f) Retirement Plans |
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2) General Insurance |
a) Health b) Home c) Motor d) Travel |
The different types of insurance policies are explained in detail below:
Life insurance, like all types of insurance, is a financial contract between you and an insurance company. In this case, the insurer agrees to pay your beneficiaries a lump sum in the event of your death. The death benefit sum promised is the name given to this lump sum. Your beneficiaries can utilize these assets to cover their everyday expenditures as well as to fund their long-term aspirations.
In exchange for this life insurance, you must pay a fee to the insurance company known as the premium. This premium might be charged as a one-time, flat price or in installments. You will continue to have life insurance coverage as long as you pay the premium correctly.
Life insurance is further classified into different sorts based on the nature of the benefit provided. Here's a rundown of the many types of life insurance.
One of the most common types of life insurance is term insurance. Because it is a pure life cover, it is also the least expensive type of life cover. In this case, your beneficiary will get the death benefit sum assured if you die during the policy period.
However, if you live to the end of the policy term, you will not be eligible for any payments. Unless you select the Return of Premium (ROP) rider at the time of purchase, in which case you would be entitled to refunds of all premiums paid upon plan maturity.
b) Endowment Life Insurance
Endowment life insurance programs, in addition to giving a death payment, can provide assured maturity benefits. You will receive the guaranteed maturity payouts at the conclusion of the policy tenure if you outlast the policy term. Maturity distributions might take the form of a lump sum, recurring periodic payments, or a combination of the two.
Endowment insurance is quite similar to whole life insurance. The sole difference between the two is the duration of the policy. Endowment plans typically offer coverage for a set length of time, typically up to the age of 60 or 65. Whole life insurance is intended to provide life insurance coverage until you reach the age of 99 or 100.
d) Children's Insurance
A kid insurance plan is designed to help you protect your child's future by providing you with life insurance as well as a guaranteed lump sum payout at maturity. In this manner, you may ensure that your child receives the financial aid needed to accomplish significant life goals such as further education and wedding expenses.
e) ULIPs
ULIPs are quickly becoming one of the most popular forms of life insurance. A ULIP is simply a hybrid of insurance and investment. In addition to providing life insurance, a part of the premium that you pay for a ULIP is invested in a mutual fund of your choice. When the fund matures, the cumulative fund value, plus any gains, is paid out to you in a lump payment.
f) Retirement Plans
Retirement-focused life insurance plans, sometimes known as annuity plans, are designed to provide regular payouts after a set length of time. After you retire, you can utilize these payments to cover your monthly costs.
General insurance or non-life insurance refers to any insurance policy that does not insure life. These plans are intended to pay a predetermined sum of money to the policyholder in the event of specific contingent occurrences or incidents.
General insurance in India is classified into four types. Each of them is examined in greater detail below.
A health insurance policy is intended to cover the costs of medical care and treatments. So, if you're ever diagnosed with a plan-covered sickness or require emergency surgery, the payout from a health insurance plan can help greatly decrease the financial effect of these medical expenditures.
Among the various types of general insurance, home insurance is by far the most disregarded. Home insurance coverage, as the name implies, protects your home. In the event that your house or its structure is damaged due to natural catastrophes, explosions, fire, burglary, or rioting, you can utilize the insurance payout to repair the damage.
A motor insurance policy simply insures your motor vehicle, such as your automobile or two-wheeler. In the case of an accident or disaster - the payout from your automobile insurance policy can be used to repair your vehicle and cover any third-party obligations that may emerge.
Travel insurance is intended to cover the hazards associated with travel. This includes, among other things, airline or baggage delays, passport or baggage loss, emergency medical expenses while travelling, and flight cancellations.