Insurance - The Economic Times
Broadly speaking, there are regular
insurance schemes and then there are general insurance schemes. Though both
type of insurance schemes have the same purpose; to settle the expenses
incurred as per the coverage available.
- Property Insurance
- Marine Insurance
- Fire Insurance
- Liability Insurance
- Guarantee Insurance
- Social Insurance
- General insurance schemes: General insurance or insurance of non-living things.
This type of health insurance policies cover non-living things against
damages caused by natural calamities, man-made disaster or accidents. For
instance, if your house burns into ashes due to cylinder explosion and you
had an insurance policy in place, you’ll get the entire cost of your house
to rebuild it. Again, the same applies on cars, buses, and all the other
non-living things which are generally very expensive.
- Life insurance:
Secondly, life insurance policies, as the name suggests and as we all
know, covers an individual’s family financially against death and
disability. Let's suppose you met an accident after which you’re no longer
capable of earning for your family; they will at least be able to file a
claim and use the sum for managing their life afterwards.
- Health Insurance:
As we all know, health insurance schemes provide coverage to the insured
against all medical expenses incurred.
- Marine Insurance: Marine
insurance provides protection against loss of marine perils. The marine
perils are a collision with a rock, or ship, attacks by enemies, fire, and
captured by pirates, etc. these perils cause damage, destruction or
disappearance o’ the ship and cargo and non-payment of freight.
- Fire Insurance: Fire
Insurance covers the risk of fire. In the absence of fire insurance, the
fire waste will increase not only to the individual but to the society as
well.
- Travel insurance: Travel
insurance is insurance that is intended to cover medical expenses, trip
cancellation, lost luggage, flight accident and other losses incurred
while traveling.
I have tried all major various types of insurance
here. However few types may be missed because they are customized as per user
needs. Hope now you know the answer of the question How many types of insurance
are there?
What
is Life Insurance?
Life insurance is a payment made to
your family in case of your death during the policy term or a payment made to
you on surviving the policy term. In return for this payment, you make periodic
fixed payments to the life insurance company.
Why
do I need Life Insurance?
- Savings Growth:
In your early years of working, some life insurance plans can be useful
way to save and invest your money. ULIPs or Unit Linked
Life Insurance Policies allow you to invest in equity and debt markets.
Under current tax laws (which are subject to future amendment), you also
get tax deductions for investment in life insurance policies and on the
maturity amounts of such policies.
- Family Support:
If you have a spouse and kids, the need to build a safety net for them
becomes important. You would want to protect them from financial hardship
in case of your untimely demise. You can also get good returns with life
insurance by investing in some policies.
- Debt:
We often take large loans in our working life, especially when it comes to
buying a house. An untimely death while the loan is still due can have
grave economic consequences for our families. In such a scenario, life
insurance money can be used to pay off the loan. Policies taken under the
Married Women’s Property Act, 1874* are also immune from attachment by
creditors.
- Illness Protection:
As you head towards retirement, life insurance policies which cover
critical illnesses become important. Some life insurance policies offer
you features that cover you from severe ailments like heart attacks and
cancer. Buying these types of policies can protect you from some of the
world’s most deadly diseases.
How
does Life Insurance work?
Let’s say Mr X has a 1 crore life
insurance policy in place. He has paid insurance premiums for three years. In
this example, we will take the premium as Rs 1,000 per month which comes to Rs
36,000 in total premiums paid. Now if he passes away in the third year, his
family will get an insurance payout of Rs 1 crore. In other words, the
insurance payout will be as per the policy cover regardless of when the insured
passes away in the period covered.
