Insurance policies can be broadly classified into two main categories i.e Life and General insurance. Let’s take a closer look at the types of insurance under these two main categories.
Life insurance: The major types of life insurance are:
Term Insurance: This is the most common and basic form of life insurance. It covers you for only a specific duration and if the insurance holder dies during the policy period, then his family receives a lump sum of money. But if the policy expires and the policyholder is still alive then no benefits are provided.
Money Back Policy: The policyholder receives a fixed amount of money at regular intervals during the policy period. When the policy matures, the policyholder receives the remaining balance amount as a lump sum. In cases of death of the policyholder then his family receives the assured sum, excluding the survival benefit.
Unit Linked Insurance Policy: These are also popularly used as an investment option as some part of the premium paid goes to the insurance and the rest gets invested in shares and equity. In case of the death of the policyholder, a lump sum will be paid as a death benefit.
Whole Life Insurance: This is simple. This policy covers the insured for his entire life and in case of the death of the policyholder then his family receives the assured death benefit.
Endowment Policy: Similar to term life insurance, this is valid only for a specific period. Besides the death benefit, the insured also enjoys survival benefits.
Child Plans: This ensures your child’s future and provides for his financial safety. The insurer provides a specific sum of money, at key stages in your child’s life. Additionally, the policy also provides the child with a lump sum amount, on the sudden death of the parent during the policy period.
Retirement Plans: This builds your retirement fund and after retirement, helping you receive a pension at periodic intervals. In the case of the policyholder’s death then his family will get the entire amount as a lump sum.
General Insurance: The major types of general insurance are:
Health Insurance: This is specifically to cover the medical needs of an individual. The plan pays for medical treatments, as per the policy type.
Motor Insurance: Motor insurance covers both two-wheelers and four-wheelers. All vehicle owners must hold valid motor insurance.
Travel Insurance: It covers you financially for any medical or non-medical emergencies while travelling inside or outside the country.
Home Insurance: It offers financial assistance if any damages occur to your house due to man-made or natural calamities like theft, floods, fire, earthquake, tsunami, lightning, storm, cyclone etc.
Fire Insurance: The fire insurance plan compensates you in case of a fire outbreak. It also covers those whose livelihoods have been destroyed due to the fire. Depending on the type of plan, it covers replacement and reconstruction of property and surroundings that got destroyed by fire.
Now that you are aware of the different types of insurance plans, here’s what to do next:
Know your requirements - identify the plan that best fits your needs
Compare and evaluate policies from different insurers
Choose the plan that best suits you
Follow through with the application and pay the premium.