What Are Different Insurance Types? A Comprehensive Overview On Insurance Coverage

In India, only around 37% of the population have insurance, 95% are uninsured and 75% don’t have life insurance. People in India are aware of insurance but are still uninsured. Educating people on the need for insurance to protect themselves and their families from any catastrophic incidents is important. Let’s read about the best insurance scheme and how it can benefit people.

What Is Insurance?

Insurance is a contract between the insurer and the policyholder. Insurance helps protect one’s life and family from catastrophic situations. The insurer provides financial coverage to the insured for losses that the insured might bear.

The policyholder has to pay a premium to the insurance company that provides financial coverage. Insurance covers the losses borne by the policyholder due to any circumstance. Premium payments made by the insured decide the sum for insurance coverage or the ‘policy limit’.

Additionally, it also gives the policyholder and their family peace of mind knowing that they won’t have to take up the financial burden entirely and they are financially secure. It also protects you from uncertain financial expenses that no one is prepared for. It takes care of the coverage immediately and secures the family’s long-term financial stability.

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Is There A Need For Insurance?

Insurance is essential for everyone, be it health insurance, motor vehicle insurance, life insurance, etc. It helps people be prepared for unforeseen circumstances and gives them financial stability.

• Financial Stability

  Insurance gives people financial stability as they will not have to cover the entire expenses on their own. During an unforeseen circumstance, people will not have a large sum of money to spare. Insurance takes away the stress and helps people stay calm knowing that the expenses are taken care of.

• Provides Protection

  Insurance reduces the impact of the expenses or losses borne by a person. It protects the policyholder from big financial expenses and also helps with the mental stress taken by the insurer.

• Ensures Certainty

  Policyholders gain a feeling of assurance knowing they have insurance. There is a certainty that financial expenses will be taken care of during any unforeseen events. It protects the policyholder’s mental health during vulnerable situations as well.

• Promotes Saving Habits

  During any event that requires financial assistance, people realise the importance of insurance and that the risk will be shared. They also realise that since the risk is shared they will not have to take all the sudden burden alone.

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What Are The Types Of Insurance Coverage?

Many types of insurance policies cover various expenses like medical expenses, vehicle damage, business loss, accidents, etc. The two most common insurance policies availed by most people are General Insurance and Life Insurance.

Let’s take a look at the different types of insurance coverage.

General Insurance

General insurance policies give general coverage for various insurance. The various coverages under general insurance are:

• Health Insurance

Health insurance covers the medical treatment and hospitalisation expenses. A policyholder can get insurance for themselves or family health insurance that includes their spouse, parents, siblings, and children. Some insurance companies have connections with hospitals which makes it easier for policyholders to get cashless service in hospitals.

• Education Insurance

Education insurance acts as an investment scheme for children. The premium will be paid till the child turns 18 years or a certain age and can avail it for educational purposes. The parents of the child will be the policyholders of the insurance. This takes away the sudden burden of paying fees to the institution. Education insurance helps parents prepare for financial stress beforehand.

• Home Insurance

Home insurance helps during natural calamities or any man-made damages to the property. It covers the assets lost during the incident and primarily covers losses like theft, floods, etc.

• Motor Insurance

Nowadays, motor insurance is mandatory for every person with a vehicle. Road accidents are very common now and it is safe for people to take motor insurance. It protects any valuable assets lost during road accidents or other damages. It is advised that policyholders carry their motor insurance while driving.

• Travel Insurance

Travel insurance protects people from any accidents or damage arising during travel. Frequent travellers are advised to get travel insurance to protect themselves from any sudden accidents or damage. Most rail, bus, and air ticket companies provide the option to get travel insurance.

• Life Insurance

Life insurance is availed to protect families and give them financial stability because of premature death. The family of the policyholder will get a lump sum if the policyholder dies before the tenure of the policy. If they outlive the tenure, then the insurance remains with the insurance company, also known as term insurance.

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Conclusion

People need to be educated about the need for insurance and how it can save people during any critical situation. Any sudden financial burden will be incredibly stressful, with insurance that can be easily avoided as the expenses will be covered by the insurance company.

Readers can mail at complaints@irdai.gov.in or call the IRDAI helpline number 18004254732 for any grievances or queries.