When you looking to take insurance and search for insurance on the internet you will find many types of insurance and different terminology which confuses normal person.
So, you probably be wondering how many types of insurance policies are out there. Here in this blog I tried to provide the information for different types of insurance policies.
People who are not from insurance/financial sector find it very hard to understand these terminologies. In this post I am trying to give you the information in plain English so that you can understand easily about the types of insurances.
There are majorly two types of insurances
- General insurance
- Life insurance
This type of insurance does not include assurance against life, but it assures money against the loss incurred to your vehicle, house, any property, phone, etc.
Since I started off with saying that I will provide information in plain English, what the above statement means is except for human life the general insurance covers i.e. pays money to the insured in case if there is any damage to the insured object.
General insurance covers almost all the things under the sky. Here is the table which shows the list of items that are included but not limited in the general insurance.
General insurance can be bought for anything that the buyer things it is worth to take insurance for. For example if someone thinks that he/she wants to get the money if their mobile phone is lost or damaged then they can take insurance against their phone and in case of loss or damage the insurance company will cover the loss by paying the amount.
The same way one can buy insurance for home, electronics, vehicle etc.
Natural Calamity Cover
Natural calamities like Earthquake, floods also mentioned as loss, we can insure our properties or anything for this kind of losses. When these things happen, and if there is damage to our properties or things the insurance companies are entitled to pay the losses.
So, it is always good to take insurance for our properties if there is chance for these kinds of natural calamities. The below are the top 10 earthquake prone cities in India. So “AinsurancePlace” strongly suggest the locals of these cities to take general insurance for their properties or businesses.
1. Guwahati – Assam
2. Srinagar – Jammu and Kashmir
4. Mumbai – Maharashtra
5. Chennai – Tamil Nadu
6. Pune – Maharashtra
7. Kochi – Kerala
8. Kolkata – West Bengal
9. Thiruvananthapuram – Kerala
10. Patna – Bihar
As the name indicates this insurance covers for human life. So, if any unfortunate thing happens like an accident and someone loses their life, the insurance company will pay insured money to their family which will help the family to at least get some relaxation in terms of money.
Life insurances not only covers the accidental death, but it is extended to disabilities, So in any situation the insurance holder gets disabled then the insurance company will pay the insured amount.
Life insurance again can be divided into two major types
1. Term insurance
2. Whole life insurance
In india the insurance companies provide Life insurance in below categories.
Since I have promised you that I give you crisp and plain English answers I have tried to explain the below in simple terms, hope it helps.
Payment of lump sum when death happens, and it is limited to that term. If the insured person dies after the term, then nothing is paid.
Example: Person A age 30 takes term insurance plan for 20 years, he pays premiums till he is 50, within these 20 years if the person dies then his family gets the insured amount. But if the person dies after the 20 years period i.e. in his 51 year then no amount Is paid.
Whole life insurance
Payment of lumpsum when death happens, and it is valid whole life i.e. 100 years. I do not think we need an example here.
Payment of lumpsum when death happens, or payment of amount to insured if they are still alive on the maturity of policy.
Example: Person A age 30 takes endowment insurance plan for 20 years, he pays premiums till he is 50, within these 20 years if the person dies then his family gets the insured amount. But if the person still alive after the 20 years term then also, he gets the insured amount from the company.
Money back policy
Payment of lump sum when death happens, or payment of amount to insured in regular intervals if the insured is alive on those intervals.
Example: Person A age 30 takes Money back policy plan for 20 years and insured amount is 10 lacks, he pays premiums till he is 50, within these 20 years if the person dies then his family gets the insured amount 10 lacks.
Also, in these 20 years the person gets 2 lacks on 5th year another 3 lacks on 10th year then the rest 5 lacks on 20th year. As mentioned, this is just an example not the accurate numbers.
Payment of lumpsum when death happens, or payment of amount to insured if they are still alive. The difference is the amount to be paid.
In ULIPs the premiums are invested into stocks, mutual funds etc. so if the ULIP earns profits then the amount to be paid is increased.
Note that even if the value of the ULIP investments falls below the sum assured specified in the ULIP, the policy holder’s nominee(s) will be paid the death benefit specified.
Generally no lumpsum amount is paid, but on the maturity the premium amount paid in all those years will be put into a corpus fund, and the amount that gets generated from the corpus fund investment will be put into a regular income stream and given to the insured person.
This is basically, you are paying some amount each month as premium until your retirement from work. Then you get each month some amount.
Since I mentioned ‘some amount’ you probably be wondering about this, basically the premiums you pay and the return you get are proportionate. The more you pay the more you get back.
Another important type of insurance is Health insurance.
Basically, the name itself indicates; the insurance amount is paid by the company when the insured person gets ill.
Most of the times the amount is always directly paid to the hospitals, pharmacies or any other health service provider in case if they have provided the health service or treatment to the insured person.
Sometimes the person pays the cash first to the service provider and send the bills to the health insurance company and then the insurance company will repay him/her back.
This is a very vast topic, so I would like cover this in separate blog…
selfgrowth site has nice posts to check for on different topics.