Risk is everywhere: When you drive your car to work, when you visit a new country, when you ride your bike to a nearby shop, when there’s a new bug going around in town.
Bottomline: You need the security of insurance.
There are two broad types of insurance:
- Life Insurance
- General Insurance
And you need both in life.
Why you need Life and General Insurance?
As you can see, there’s always a need for insurance, be it a life insurance or otherwise.
So, before you decide to get one, read one more about all the insurances available.
Types of Insurance
What is Life Insurance
Life insurance is a contract that offers financial compensation in case of death or disability. Some life insurance policies even offer financial compensation after retirement or a certain period of time. Life insurance, thus, helps you secure your family’s financial security even in your absence. You either make a lump-sum payment while purchasing a life insurance policy or make periodic payments to the insurer. These are known as premiums. In exchange, your insurer promises to pay an assured sum to your family in the event of death, disability or at a set time.
Life insurance can help you support your family even after retirement. Depending on what it covers, Life insurance can be classified into various types:
Tax Benefits
- Life insurance not only ensures the well-being of your family, it also brings tax benefits.
- The amount you pay as premium can be deducted from your total taxable income.
- However, this is subject to a maximum of Rs 1.5 lakh, under Section 80C of the Income Tax Act.
- The premium amount used for tax deduction should not exceed 10% of the sum assured.
What is General Insurance?
A general insurance is a contract that offers financial compensation on any loss other than death. It insures everything apart from life. A general insurance compensates you for financial loss due to liabilities related to your house, car, bike, health, travel, etc. The insurance company promises to pay you a sum assured to cover damages to your vehicle, medical treatments to cure health problems, losses due to theft or fire, or even financial problems during travel.
Simply put, a general insurance offers financial protection for all your assets against loss, damage, theft, and other liabilities. It is different from life insurance.
Let us help you understand better:
As you can see, General Insurance can be the answer to life’s various problems. But, for that, you need to select the right insurances from the myriad ones available.
What are the types of General Insurance available? / What all can be insured?
You can get almost anything and everything insured. But there are five key types available:
- Health Insurance
- Motor Insurance
- Travel Insurance
- Home Insurance
- Fire Insurance
Health Insurance
This type of general insurance covers the cost of medical care. It pays for or reimburses the amount you pay towards the treatment of any injury or illness.
It usually covers:
- Hospitalisation
- The treatment of critical illnesses
- Medical bills prior to or post hospitalisation
- Day care procedures like Cataract operations
You can also opt for add-on benefits like:
- Maternity cover: Your health insurance covers you for the costs related to childbirth. This includes pre-delivery check-ups, hospitalisation during delivery, and post-natal care.
- Pre-existing diseases cover: Your health insurance takes care of the treatment of diseases you may have before buying the health insurance policy.
- Accident cover: Your health insurance can pay for the medical treatment of injuries caused due to accidents and mishaps.
Your health insurance can also help you save tax. Your premium payment can reduce your taxable income.
Senior citizen = Individual aged 60 or over
Motor Insurance
Motor insurance is for your car or bike what health insurance is for your health.
It is a general insurance cover that offers financial protection to your vehicles from loss due to accidents, damage, theft, fire or natural calamities
You can also get motor insurance for your commercial vehicles.
In India, you cannot drive or ride without motor insurance.
Let’s look at the two key types:
1. Car Insurance
It’s precious—your car. You paid lakhs of rupees to buy that beauty. Even a single scratch can be painful, forget about bigger damages.
Car insurance can reduce this pain for a few thousand rupees.
How it works:
What the insurer will pay for depends on the type of car insurance plan you purchase
2. Two-wheeler Insurance
This is your bike’s guardian angel. It’s similar to Car insurance.
You cannot ride a bike or scooter in India without insurance.
How it works:
As with car insurance, what the insurer will pay depends on the type of insurance and what it covers.
You can increase your insurance protection with these Add-on covers for your car and bike insurance:
For more details about Motor Insurance, click here.
Travel insurance
A travel insurance compensates you or pays for any financial liabilities arising out of medical and non-medical emergencies during your travel abroad or within the country.
There are two types of Travel Insurance.
What all does travel insurance usually cover?
- Loss of baggage
- Emergency medical expenses
- Loss of passport
- Hijacking
- Delayed flights
- Accidental death
Home Insurance
Home insurance is a cover that pays or compensates you for damage to your home due to natural calamities, man-made disasters or other threats.
It covers liabilities due to fire, burglary, theft, flood, earthquakes, and sabotage. It not only offers financial protection to your home, but also takes care of the valuables inside the property.
Some of the common types of home insurance are:
Fire Insurance
Fire insurance pays or compensates for the damages caused to your property or goods due to fire.
It covers the replacement, reconstruction or repair expenses of the insured property as well as the surrounding structures.
It also covers the damages caused to a third-party property due to fire.
In addition to these, it takes care of the expenses of those whose livelihood has been affected due to fire.
Types of fire insurance
Some of the common types are:
How to buy Insurance?
You can buy in 4 simple steps:
Step 1:
KNOW WHAT YOU NEED
- Understand the covers you need based on personal requirements.
- Get all the important details. For example, in the case of motor insurance get details such as the manufacturing date of the vehicle, engine specifications, etc. For health insurance, check whether you need insurance for self or the entire family.
- This initial assessment will help you get an idea about the coverage that you need.
Step 2:
CHECK OPTIONS AVAILABLE
- Compare the benefits offered.
- Check the add-ons offered
- Don’t forget to read the exclusions
- What’s the sum assured?
- Are there any extra services offered
Step 3:
PICK THE RIGHT PLAN
- Select the plan that best suits your requirements.
- Reach out to the company offering the plan.
Step 4:
PAY PREMIUM
- Fill in the application and pay the premium.
- You can do it online on the insurer’s website.
- You can also buy from a broker or the dealership.
What does insurance not cover?
Your policy may not cover liabilities in certain situations. These are known as exclusions.
Let’s have a look at a few of them.
How much does insurance cost?
Your insurance costs depend on your premium amount. This premium amount depends on several factors that differ from insurance to insurance. Here’s a look:
Life Insurance
- Age
- Health (past and current)
- Your occupation
- The type of coverage/plan
- Your smoking and drinking habits
- The sum assured
Motor/Auto Insurance:
- Make-Model of the vehicle
- The type of coverage/plan
- The value, age of your vehicle
- Your claim history
Travel Insurance
- The sum assured
- The type of coverage/plan
- Age
- Your health
- The location of travel
Health Insurance
- Your family health history
- The sum assured
- The type of coverage/plan
- Your age and gender
- Your health history
Home Insurance
- The size of your home
- The type of coverage/plan
- The age of your home and the systems installed therein
- The location of your home
- The sum assured
You can also use online calculators to check the premium amount.
How to use the insurance money?
- You have to make a claim against your insurance policy.
- Give details about the loss you suffered. This differs from insurance to insurance.
- Submit the bills/proof of damage, loss, hospitalisation, etc.
- The insurance company would verify your claim.
- It will then pay the bill or reimburse you for your loss.
Read informative General Insurance Articles at Acko.
Having a vehicle insurance policy helps protect against damages to your vehicle under various circumstances. Stay upto date with the latest Car Insurance Articles and Two Wheeler Insurance Articles here.
Read all our insurance & non insurance related articles here.
