From A to Z: Explaining Different Types of Insurance Policies 

From A to Z: Explaining Different Types of Insurance Policies 

Insurance should be a pivotal part of any financial strategy. This is what helps you secure yourself and your loved ones from the financial impact of any mishap or unforeseen scenario down the line. Here is a closer look at some of the available options that you can check out in this case.  

Life Insurance 

Life insurance is a contract with the insurance company that enables financial compensation in case of disability or death. Some policies even offer compensation post-retirement or after a specific duration. Life insurance is what helps you secure the future of your family in your absence. You can make a lump sum payment to purchase your policy or pay for it with periodic installments/premiums. In exchange, an assured sum will be paid to your nominees in the event of death, disability, or at a specific period.  

Here are the types of life insurance plans that are available.  

• Term Insurance– Term insurance offers pure life coverage where the insurer pays an assured sum to the nominee in the event of the policyholder’s demise within the policy tenure. There is also a return of premium option, where the premiums paid are returned to the policyholder in case he/she survives the term.  

• Whole Life Insurance– This plan offers coverage for the insured person’s lifetime until he/she is 99 or 100 years of age. The family will get a payout in case of the demise of the policyholder within the policy period. Some plans in this category may also come with bonus features.  

• Unit-Linked Insurance Plans (ULIPs): These plans combine life coverage with investments across multiple funds (equity and debt). They have 5-year lock-in periods and offer the opportunity to earn higher returns.  

• Money-Back Policy– A percentage of the sum assured will be paid at periodic intervals throughout the entire duration as the survival amount, with the balance given as maturity proceeds. The life coverage remains, with the family getting the lump sum payout in case of the policyholder’s demise within the policy tenure.  

• Child Plans– These plans offer financial security to your children. Your kids will get a lump sum in case of the parents’ demise within the policy tenure. The insurance company pays the premium amount in such scenarios. The child will get a specific amount after particular intervals.  

• Retirement Plans– These are usually pension plans with a regular amount after retirement, while the sum assured can be claimed by your family in case of your demise.  

• Endowment Policy– The same life insurance payout condition aside, the maturity proceeds are given to the policyholder once the duration concludes.  

General Insurance 

General insurance is a contract with the insurer in which you can get financial compensation for any loss other than death. It covers everything related to your life, including your health, travel, bike/two-wheeler, car, house, and so on.  

• Health insurance– Health insurance offers financial coverage for the cost of hospitalization, medical care, and treatment. It reimburses/pays for the treatment of any illness/injury while covering pre and post-hospitalization, daycare, surgeries, medications, health check-ups, and more. It comes with several add-ons, including terminal and critical illness, maternity cover, pre-existing disease coverage, consumables coverage, accidental death and disability, and so on.  

• Motor insurance– This means insurance for your bike or car and covers the financial cost of damages, accidents, fire, natural calamities, theft, and more such scenarios.  

• Travel insurance– This means compensation for financial liabilities arising due to non-medical and medical emergencies while travelling abroad or within India. This offers coverage for baggage losses, emergency medical costs, passport losses, delayed flights, hijacking, accidental death, and more.  

• Home insurance– This is insurance coverage for damages to the house arising from manmade disasters, calamities, threats, floods, burglary, fire, theft, sabotage, earthquakes, and more. It may also ensure coverage for valuables inside the home.  

• Fire insurance– Fire insurance offers compensation for damages to properties or goods owing to fire. It may cover the reconstruction, replacement, or repair expenditure of the property that is insured and surrounding structures. It may also cover damages to any third-party structure/property owing to fire, along with the expenditure of people who have had their livelihoods affected due to the same.  

Conclusion

Hence, these are the types of insurance plans that are commonly available in India for policyholders. Check them out and start building your financial portfolio with term insurance, health insurance, and other crucial policies.