Life Insurance
Life insurance is a contract between the policyholder and an insurance company where the insurer agrees to pay the nominee a sum of money upon the death of the life assured , in exchange for premium payments. Life insurance provides a financial safety net for your loved ones, ensuring they are protected from financial difficulties in the event of your absence. Let us understand this in detail with various types available.
Term Insurance
Term insurance is the simplest form of life insurance. It covers the life assured for a fixed tenure. If the life assured dies during that time, the nominee gets the sum assured.
Term Insurance with Return of Premium (TROP)
A term insurance plan gives the nominee the sum assured if the life assured dies during the policy term. However, if the life assured survives the term, there is no maturity benefit in a term plan . This is where a TROP turns out to be useful. It returns all the premiums paid (excluding taxes), even if the life insured survives the tenure.
Whole Life Insurance
Whole life insurance gives coverage to the life assured for the entire life, not just for a predetermined period of time. When the life assured dies, the insurer pays the sum assured to the nominee.
Unit Linked Insurance Plan (ULIP)
ULIP is a life insurance plan that combines life insurance with market linked investment. Part of your premium goes towards life cover, and the other part is invested in market-linked funds like equity funds , debt funds, balanced funds. This plan offers financial security to your family, and gives you the opportunity to grow funds over time .
Endowment Plan
An endowment plan offers both life insurance and savings. The policyholder pays a premium for a set time. If the life assured dies during the policy term, the nominee gets the full sum assured. If the life assured survives the term, they get a lump sum of money at maturity.
Child Insurance Plan
A child insurance plan helps you save for your child’s future, such as their college education or marriage expenses. The parent is the life assured , and the child is the nominee. In case of your demise, the plan continues, (if wavier of premium option is opted ) and the nominee (here, your child) receives the policy benefits .
General Insurance
General insurance protects things other than your life, like your health, home, car, or travel. It is also known as non-life insurance. It is a broad category of insurance that provides financial protection against various risks and losses not related to life. They include accidents, theft, hospital stays, or natural disasters. This type of insurance has different types serving different objectives.
Health Insurance
Health insurance provides financial protection against medical expenses incurred due to illnesses or health conditions covered under the policy. It helps pay for costs such as hospitalization, treatments, surgeries, and emergency care etc.
Home Insurance
Home insurance provides financial protection against damage to your house and its belongings caused by events such as fire, floods, theft, earthquakes, and other covered risks. In the event of an unfortunate incident, the insurer compensates for repairs or reconstruction of your home, as outlined in the policy terms.
Travel Insurance
Travel insurance helps protect you during trips, whether in India or abroad. If you face problems like flight delay, lost check-in baggage, passport loss, or a medical emergency while travelling, this plan covers the cost. Some plans also give support for hospitalization during the trip. It is useful for family vacations, business travel, when you study abroad etc.
Pet Insurance
Pet insurance typically covers veterinary and related expenses if your pet ( dog ,cat etc )falls ill or gets injured. While some policies may extend coverage to other pets like rabbits, guinea pigs, or exotic birds, such coverage is not always included and varies by insurer. It can also cover vet visits, vaccinations, and surgeries. Some plans pay if your pet is lost or stolen. You pay a small premium regularly for the coverage. If your pet needs treatment, the insurance helps with bills. Just like we protect our family, this plan protects our furry friends.
Electronic Equipment Insurance
This insurance protects your mobile phone or laptop or any electronic gadget from accidental damage, theft and certain electrical and mechanical damages. If your device gets damaged or lost, the plan covers repair or replacement costs. You pay a regular premium to keep the device covered.
Motor Insurance
In India, The Motor Vehicles Act of 1988 statesthat every vehicle must have third-party car insurance. Car insurance is a financial protection plan that covers you and your vehicle against risks such as accidents, theft, and damage to third parties. If your car is damaged or you cause injury or damage to another person or their property in an accident, the insurance helps cover repair costs, medical expenses etc. It typically includes coverage for both vehicle damage and bodily injury, depending on the type of policy you choose.
Features of Insurance
Insurance comes with many features designed to safeguard your finances and give you peace of mind during uncertain times.
- One main feature is the premium—this is the amount you pay regularly to keep the plan running. It can be paid monthly, quarterly, half-yearly, yearly, or lump sum.
- Another feature is the sum assured (life insurance) or sum insured (general insurance)—this is the amount the insurance company agrees to pay when you raise a valid claim.
- Every insurance policy also has a term, which is the duration during which the plan stays active. Then, there is a waiting period, especially in health insurance, where you must wait before making some claims.
- Some insurance plans such as health insurance also have a deductible, which is the portion of expenses you pay before the insurance company covers the remaining costs . The policy document is an important document that lists what is covered and what is not along with the terms of coverage.
- Lastly, some plans also offer tax benefits under Section 80C under the old tax regime. Additionally, the claim amount is tax-free as per Section 10(10D) of the Income Tax Act, subject to certain terms and conditions..
Understanding these features can help you choose the right policy that fits your life and needs.
What are the Benefits of Insurance?
Insurance provides financial security for you and your family by helping manage unexpected expenses during emergencies or unforeseen events.. One big benefit is financial safety. If you face a health problem, accident, loss of life or other covered substantial loss, the insurance payout can help pay the bills , etc and provide financial safety. Another benefit is peace of mind. When you know that you and your loved ones are covered, you feel less worried. Insurance also helps in future planning. For example, life insurance helps your family by paying the sum assured to your nominee in the event of your ( life assured) untimely demise during the term. Health insurance pays for hospital bills. Some insurance plans also give tax benefits, which means you save money when filing your income tax. It supports you financially and helps you live a more secure life.
Conclusion
Insurance acts as a financial safety net, helping protect your savings and secure your future. Whether it's health issues, life uncertainties, or car-related mishaps, insurance eases the financial burden during challenging times.. Knowing what insurance is is essential for everyone. With many plans available in India, you can choose one that fits your needs. Always read the terms and check what is covered and what is not.
FAQs
What is insurance in simple words?
Insurance is like a safety net. You pay the amount called a premium to an insurance company at selected durations such as every month , year etc. In return, the Insurer promises to pay for the loss or damage covered by the policy.
What are the factors that affect life insurance premiums?
Life insurance premiums are the payments you make to keep your contract in force. Depending on many factors, premiums are priced differently. Generally, younger, healthier non-smokers will pay less premiums than older individuals, those with more health concerns or smokers. A few of the factors that affect premiums include are your age, gender, health, lifestyle, occupation, sum assured, and the length of the insurance term you want.
What is the waiting period under insurance policies?
A waiting period in insurance refers to the time span after purchasing the policy during which the coverage for certain conditions or events is not active. ..
How many claims can I file under my general insurance policy?
You can file more than one claim in general insurance policy. There is usually no strict limit, but each claim must match the rules of the policy. For example, if you have health insurance and fall sick twice in a year, you can claim both times if it is covered. But there is a limit, called the sum insured. Once that amount is used up, you cannot claim more for that year.
What are the 6 fundamentals of insurance?
These are 7 basic ideas that insurance is built on:
- Insurable Interest – The policyholder must have a potential financial loss in the event of a covered incident (like death or damage) to the insured item or individual.
- Utmost Good Faith – It mandates that both the insurer and the insured must be completely honest and disclose all material facts relevant to the policy .
- Indemnity – Insurer agrees to compensate the insured for their loss.
- Contribution – If you have multiple policies covering the same risk, all insurers share the claim proportionally.
- Subrogation – Under then fundamental of subrogation the insurance company can request reimbursement from the at-fault party after it has paid a covered claim.
- Proximate Cause – It is the primary or most dominant reason for a loss or damage that can be directly linked to an insured event.
An ISO 9001:2015 
