Insurance is necessary given the unpredictability of life and secures the family members’ futures. An insurance policy is a legal agreement between the insurer and the insured to provide cover and funds for any future unfortunate occurrence. The policyholder pays a certain sum known as the “premium” to keep the policy valid for the uncertain future. The premium amount is computed based on the requirement of the policyholder and the insurance plan selected.
The categories of insurance available in the market are general and life insurance. All the insurance companies offer various types of insurance policies curated to the varied needs and requirements of the masses.
We have listed below the details of the types of insurance policies available in the market:
- General Insurance
General insurance policies comprise health, motor, home, fire and travel insurance categories.
- Health and life insurance are essential insurance policies as they provide the financial support required in emergencies and unforeseen circumstances. Health insurance plans also offer tax benefits under section 80D, wherein the premium paid for the policy can be deducted up to INR 25,000.
- Travel insurance is gaining prominence with the increasing number of international travellers to protect against untoward incidents that may cause financial loss to the policyholder.
- Motor and home insurance protects the vehicles against any man-made and natural calamity that causes damage to the vehicle. Fire insurance protects against financial loss caused by accidental fire.
Financial advisors recommend purchasing health insurance to protect the insured in medical emergencies and provide relief against exorbitant medical bills. Similarly, the advisors recommend insuring their motor vehicles and houses against emergencies. All the general insurance policies can be equipped with additional floaters to cover all categories of crises, namely hospitalization, accidents, any natural or man-made calamity, fires, and any unfavourable contingency that causes financial loss to the insured.
- Life Insurance
Life insurance policies comprise categories such as term life insurance, whole life insurance, endowment plans, unit-linked insurance plans, and child and pension plans.
- Life insurance policies safeguard life while also providing options to maximise their wealth. Term insurances are valid for a certain period, whereas life insurance policies are valid for your lifetime. Life insurance plans also offer tax benefits under section 80C, wherein the premium paid for the policy can be deducted up to INR 1.5 lakhs.
- Endowment plans are designed to payout a certain sum of money after a specific period or on the death of the insured.
- Investment in unit-linked insurance plans offers dual benefits through an insurance policy and investment options. The premium is allocated in market-linked debt and equity instruments.
- Child plan insurances combine investment with insurance and offer financial support for goals such as higher education for your children.
- Pension plans are retirement plans you can invest in throughout your working years to accumulate a lump sum corpus for living comfortably.
Key things to note before buying an insurance policy
It is essential to select the appropriate insurance policy per your requirement and goals to ensure financial security for you and your family in the face of adversity. It is advised to go through all the documents carefully while purchasing to avoid any setbacks in future.
