Types of insurance
Health Insurance

Types of insurance

Life is full of uncertainties. Unexpected situations can unsettle even the most well-thought-out plans and make life disrupted and chaotic.

Insurance can make a huge difference when uncertainty stares at you. Insurance coverage can act as a hedge against the risks posed by unpredictability.

There are different types of insurance coverages. There are life insurance policies that offer financial protection to your loved ones in case of your unfortunate death. There are also policies that protect the assets and property.

It is always beneficial to know different types of insurance policies as such an understanding helps you choose the one that aligns with your needs the most.

Types of insurance in India

Insurance is a contract between an insurance company and an individual. It can be divided into two broad categories:

  • Life Insurance

  • General Insurance

Let us delve a little deeper into each of them.

Life Insurance: A life insurance policy will protect your loved ones in case of an unfortunate event involving you. It covers your life and in case of unfortunate death the family members will receive financial assistance. The sum assured will be paid to the nominee mentioned by the insured in the policy. You have the flexibility of choosing the policy period, the sum assured and the payout option based on your financial needs and preferences. Some plans also come with an element of saving and investment, making it easier for you to build wealth.

Different types of insurance policies are as follows:

Term life insurance: This type of insurance covers your life for a specific period. It is the most basic and affordable insurance policy that will secure the financial future of your loved ones. You pay a low premium and enjoy a high sum assured. In case of an unfortunate death within the policy period, the loved ones will receive the sum assured according to the payout option chosen at the time of purchase of the policy.

Whole Life insurance: Also referred to as traditional life insurance, the whole life insurance plan will offer coverage for the life of the insured individual. It does not have a restriction on a specific number of years. It will also offer to pay a death benefit. The maturity age for the plan is 100 years and it comes with a savings component. This helps accrue a cash value through the policy term. If the individual outlives the maturity age, then the plan will become matured endowment.

Unit-Linked Insurance Plan (ULIP): A unit-linked insurance plan will offer insurance and investment in one contract. Your premium will be distributed towards investment and insurance. It will be invested in different market-linked equity and debt instruments. ULIPs offer high flexibility and also allow you to choose the premium allocation as per your risk appetite and financial requirements.

Endowment Plans: An endowment plan will cover you from uncertainties of life but will also allow you to save over a specific period. On maturity, the policyholder will receive the lump sum amount in case of survival. In case of death, the sum assured will be paid to the family members of the policyholder.

Child Plans: You can secure the life goals of your child through child plans. It is a life insurance plan that will make it easier for you to achieve long-term goals like higher education and the marriage of your child, even if you are no longer around. The plan is a combination of insurance and savings and will help plan the financial future of your child. The amount received at the time of maturity can be used to meet the financial needs of your child.

Pension Plans: The pension plan is also referred to as a retirement plan and it is an investment plan that will allow you to accumulate a part of the savings over an extended period. You can easily handle the uncertainties after retirement through a pension plan. It will ensure that you continue to receive a regular flow of income. Hence, you can create a financial cushion for life after retirement, where you contribute a certain amount regularly until you retire. Post-retirement, this amount will be given back to you as a pension at regular intervals.

General Insurance

A general insurance policy will help cover other risks and assets including your health, home, business, motor, and more. The policies offer varying coverage and financial protection against losses to your assets. It helps cover everything valuable to you. The different types of insurance policies include:

  • Motor insurance

  • Health insurance

  • l
  • Travel insurance

  • Fire insurance

  • Home insurance

  • Marine insurance

  • Business insurance

Motor insurance: Motor insurance is offered for your car or bike or other type of motor vehicle. The insurance company will compensate you for the losses or damages caused by an accident involving the insured vehicle. In case of third-party damages, the insurance company will pay for the liabilities that may arise. It is mandatory in India for car and bike owners to have third-party liability insurance.

Motor insurance can further be categorized as follows:

  1. private car insurance Four-wheelers owned individually and for personal use will be covered in this plan. There are two policies to choose from-- third-party only liability policy and comprehensive insurance policy. The third-party liability insurance will only pay for the third-party liabilities that may arise. It will not cover damages to your car. Comprehensive car will cover the third-party liabilities and damages to your car in addition to theft, natural and manmade calamities.

  2. Bike insurance: All two-wheeler owners need to have bike insurance in India. It is a type of insurance that will cover accidents and damages to the bike.

  3. Commercial vehicle insurance: When a vehicle is owned and used for commercial purposes, it is essential to have commercial vehicle insurance.

Health insurance

Health insurance policy covers the risk to your health. It will cover the expenses that are incurred for medical care and the plan will either pay at the hospital or reimburse the amount paid for the treatment of an illness or injury. It usually covers daycare procedures, hospitalisation, pre- and post-hospitalisation, and treatment for critical illnesses. The cost of health care is consistently rising in the country and this makes health insurance an absolute necessity. There are different plans you can choose from. These include:

Individual health insurance: This is a basic health insurance coverage that will cover one individual.

Critical illness cover: As the name suggests, the critical illness cover will offer coverage against different life-threatening illnesses such as kidney failure, stroke, cancer, heart attack. The policyholder will receive a lump sum amount on the diagnosis of a critical illness.

Family floater insurance: The family floater insurance will allow you to get coverage for an entire family under a single plan. It includes husband, wife as well as two children.

Group health insurance: The group health insurance is offered by the employer to employees.

Senior citizen health insurance: This insurance plan caters to the individual above the age of 60 years.

Maternity health insurance: The maternity health insurance covers the prenatal, postnatal, and delivery stage expenses. It offers protection to both the mother and the newborn.

Travel insurance

Travel insurance is a policy that will protect you and your family when you are travelling in the country or abroad. It does not matter whether you are travelling solo or in a group, the insurance coverage will ensure you have a peaceful journey. It will take care of the issues you may face in your trip like flight cancellation, loss of baggage, medical emergencies, loss of passport, etc. You can choose from domestic travel insurance, individual travel insurance, international travel insurance, student travel insurance, family travel insurance, and senior citizen travel insurance.

Domestic travel insurance: The type of insurance policy is ideal for travel within the country.

  1. International travel insurance: If you are taking any trips outside India, international travel insurance offers an ideal coverage.

  2. Student travel insurance: For students going abroad for higher studies, the student travel insurance will offer adequate coverage.

  3. Individual travel issuance: The insurance will provide coverage when traveling alone.

  4. Family travel insurance: Suitable for family vacations.

  5. Senior citizen travel insurance: Designed for senior citizens, aged between 60-70 years.

Fire insurance

A fire insurance policy will compensate for the losses incurred due to fire breakout. It helps individuals and companies to reopen their places after extreme damage due to fire. The policy also includes riot losses, turmoil and war risks.

Home insurance

A home insurance policy will protect the structure of your home and the contents inside. If there is any damage or physical destruction, the insurance company will pay for the damages. It will also provide coverage against natural and man-made calamities like tornadoes, fires, robbery, earthquake, and burglary.

Different policies under this category are as follow:

Building insurance: This coverage will protect the structure of the house from damage in any calamity.

Standard fire and special perils policy: This is a type of insurance policy that offers coverage against the damages caused due to natural calamities, earthquakes, fire outbreaks, landslides, floods, storms, and anti-social human activities like riots, strikes, and explosions.

Public liability coverage: It will provide coverage against damage to the third party or guest on the insured property.

Burglary and theft insurance: The insurance offers compensation for the stolen goods in the event of theft or burglary.

Personal accident: The policy will provide financial coverage to the insured and their family against the permanent dismemberment or sudden demise of the individual anywhere in the world.

Landlords’ insurance: It offers coverage to the landlord against contingencies like loss of rent or public liability.

Tenants’ insurance: The policy offers financial protection to the tenant against loss of personal property.

Contents insurance: Contents insurance will offer compensation for the loss of vehicles, furniture as well as other appliances in case of theft, riots, fire, and floods.

Marine insurance

A marine insurance policy will provide protection from losses due to marine perils. These include fire, attack by enemies, collision with a ship or rock, etc. Such events can cause destruction, damage, and the disappearance of the ship or the non-payment of freight. The policy will insure the hull, freight and cargo. The scope of marine insurance is divided into two --ocean marine insurance and inland marine insurance. In the ocean marine insurance, the policy will only insure the marine perils and in inland marine insurance, the inland perils will also be covered.

Business insurance

A business insurance policy will protect the business from financial losses that occur during the operations of the business. It offers coverage for the risks associated with people, and property. It includes third-party liabilities, employee insurance policy, property insurance, and professional liability insurance. The insurance will compensate for the losses incurred due to the business operation or while providing a professional service. One should choose the policy based on the industry the business operates in, the type of business, and the financial requirements of the business.

There are many different insurance types available in the market today. It is advisable to consider your needs first before making the buying decision. You should understand the coverage and terms thoroughly before purchasing. If you need additional coverage on the policy you have, consider adding riders to it to enhance the coverage and make the most of the premium you pay for the policy. Remember to read the inclusions and exclusions on the policy documents.

Each insurance policy is designed to meet the changing demands of consumers and offers financial protection from loss and damages. It is important to choose an appropriate sum assured to ensure adequate protection at all times. Timely payment of premium is necessary to remain covered under the policy.

Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.

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