Insurance Policy explained

Insurance Policy & its Classification

 

Type of insurance

Our lives are at risk in every moment. In this case we stay at home or travel outside the house. We face many problems in our daily activities. But we can overcome these different problems if we have a little bit of money. And this money we earn a lot of hard work and save some of it for future life. Insurance is one of the other ways to save for the future.

There are two types of insurance:

1) Life insurance

2) General insurance

And your life needs both.

Why do you need life and general insurance?                                

Situation 1

Your childhood friend suddenly met with an accident. He is survived by his wife, two children and an elderly parent. Your friend had minimal savings, enough to cut two months' expenses. You could have secured a life insurance with the 7500 rupees that your friend had. By doing so, they would have got 10 lakh rupees.

 Situation 2

Suppose you suddenly catch a cold. But work keeps you busy. Eventually, the cold got worse with pneumonia. You need to be admitted to the ICU for one week. This is your cost. The charge for the hospital is Rs 60,000 and another Rs 10,000 is required for the treatment. But Rs 3,500 health insurance can ensure that you have paid Rs 0 out of your own pocket.

Situation 3

You have made up your mind to travel in Switzerland for the first time. You have a stopover in Abu Dhabi. Your first flight is late. You also miss the second plane and get stuck. You need 26,000 rupees to fly to Spain. You have to return to your own country for 20,000 rupees. Also, the loss of unity and of everything is started from the cancellation of the hotel booking. A little bit of travel insurance can help you pay your travel bill of Rs 500.

Situation 4

You are running to work like any other day. However, oil has spread on the streets. A car goes out of control and hit you. Your bumpers and headlights are injured. The price of your bumper is 10,000 for repairs. Cost another Rs 2,000 for headlights. How much does car insurance cost each year that could pay some compensation for your car.

As you can see, insurance is always needed for all time, be it life insurance or otherwise. So, before you decide to get one, learn as much as possible about all the insurance available.

Type of insurance

There are different types of insurance –

1) Life insurance

2) General insurance

3) Term life

4) Money-back policy

5) Unit-linked insurance

6) Plan Pension Plan

7) Motor insurance

8) Home insurance

9) Health insurance

10) Fire insurance 

 

What is life insurance?

Life insurance is an agreement that provides financial compensation in case of death or disability. Some life insurance policies offer financial compensation even after retirement or for a certain period of time. Life insurance, therefore, helps you with your family's financial security even in your absence. You either pay individually when you buy a life insurance policy or pay the insurer periodically. These are known as premium. In return, your insurer promises to pay a certain amount to your family in case of death, disability or at a certain time. Life insurance can help you support your family even after you retire.

Depending on what it covers, life insurance can be classified into different types:

Term insurance

- This type of insurance is mostly common.                                                                                       

- It provides you for a fixed period of time.

- Your family will receive a single amount in case of your death.

- However, if you survive this term, you or your family will not be paid.

Whole life insurance

- It lasts you a lifetime.

 - Your family receives a certain amount of money after your death.

- They will also be entitled to a bonus that often accrues in this amount.

Endowment policy

- Like a term policy, it is also valid for a certain period of time.

- In case of your death, your family will be paid in one lump sum.

 - Not like a term plan, you can achieve maturity after the term.

Money-back policy

- A certain percentage of the sum insured will be paid to you throughout the term as a survival benefit.

- After the term expires, you will get the amount of balance as the maturity increases.

- In case of death during the policy period your family ensures full amount of insurance.

This is regardless of survival benefit payments.

Unit-linked insurance plan

- These national products are doubled as investment tools.

- A portion of your premium goes to your insurance cover.

- The remaining amount and equity is invested.

- In case of your death, your family will be paid in one lump sum.

Child planning            

- It confirms the financial security of your child.

- In the event of your death your child's exclusive amount of money is available.

- The insurer pays the premium amount after your death.

- Your child will continue to receive a certain amount of money at certain intervals.

Pension plan

- It helps in building your retirement fund.

- You can get regular pension amount after retirement.

- In case of your death, your family may claim the sum insured.

Tax benefits

Life insurance not only ensures the happiness of your family, it also brings tax benefits. The amount you pay as a premium can be deducted from your total taxable income. However, under Section 80C of the Income Tax Act, it is subject to a maximum of Rs 1.5 lakh. The amount of premium used for tax deduction shouldn’t be more than 10% of the sum insured.

What is General Insurance?

A General Insurance is a contract that pays financial compensation for any loss other than death. It insures everything except life. A general insurance company compensates you for financial loss due to your liability for your home, car, bike, health, travel, etc. There are losses, even financial problems while traveling. Simply put, a General Insurance provides financial protection for all your assets against loss, theft and other liabilities. This is different from life insurance.

Now let us better understand general insurance-

Situation 1

You are planning to propose to your girlfriend at the Eiffel Tower. You have already finalized the deal with one of the jewelers in Paris. But, things don't go as planned and you met with an accident there. You need Rs 150,000 for treatment. However, there is still money to be paid for that trimming of jewelry.

How?

Your travel insurance has prepared you for emergencies. It paid for your accident-related expenses. You can go ahead and surprise your partner with a diamond ring without worrying about the cost of treatment.

Situation 2

You can’t stop celebrating your new car. You hit the roads with your latest possession. Everything is fine until a car suddenly tries to overtake you. It knocks out huge teeth and detaches your left mirror. Rs 30,000 is needed to repair the rupee for a new child in your block. Still a smile is on your face.

How?

The holes in your car don’t make a tooth in your pocket. Your motor insurance covers your own loss to pay for the loss of your car due to an accident. In fact, the insurer settles the bill directly in the garage.

Situation 3

Your daughter wants to be a pilot. You save all your disposable income to fund his dreams. Unfortunately, you have become seriously ill. You need money. 2 lakh for your treatment is needed immediately. Still, you can easily pay your daughter's course fees.

How?

You did not hesitate to choose one over the other and compromised with your daughter's future. Your health insurance has taken care of your medical expenses. Your savings remain ineffective due to your sudden illness.

So, as you can see, General Insurance can be the answer to many problems in life. However, for this you have to choose the right insurance from the countless available. 

What types of general insurance are available? / Can all be insured?

You can get almost anything and everything is insured.

However, there are five main types available:

1) Health insurance

2) Motor insurance

3) Travel insurance

4) Home insurance

5) Fire insurance

Let’s discuss a bit of all these insurances:

Health insurance

This type of General Insurance refuges the cost of medical care. It pays or reimburses for the amount you pay for the treatment of an injury or illness. This is usually: Hospitalized Treatment of serious illness Medical bill before or after hospitalization Day care procedures such as cataract surgery You have add-on benefits such as: Maternity cover: Your health insurance covers you for childbirth related expenses. These include pre-delivery check-ups, hospitalization during delivery, and postpartum care. Coverage of pre-existing diseases: Before buying a health insurance policy, your health insurance takes care of the treatment of diseases that may affect you. Accident cover: Your health insurance can pay for the treatment of injuries caused by accidents and mishaps. Your health insurance can also help you save on taxes. Paying your premium can reduce your taxable income.

Motor insurance

Motor insurance is for your car or bike whereas health insurance is for your health. This is a general insurance cover that provides financial protection to your vehicles from damage due to accident, loss, theft, fire or natural disaster.  You can also be provided motor insurance for your commercial vehicle. You cannot drive or operate a car anywhere throughout the world without motor insurance.

Let's look at the two main types:

 

1. Car Insurance

 - Your car is a worthy strength to you. You paid millions to buy that beauty. Even a scratch can be painful, forget about the bigger damage. Car insurance can reduce this pain by a few thousand rupees. How it works: What the insurer will pay for you depends on the type of car insurance plan you have bought. What the insurer will pay for you depends on the type of car insurance plan you have bought.

2. Wheel Insurance

- This is your bike's guardian angel. It is similar to car insurance. You cannot ride a bike or scooter in your own country without insurance. How it works: As with car insurance, what the insurer will pay depends on the type of insurance and what it is.

Motor insurance type:

1) Third party insurance Compensation for damages to another person, their car or third party property.

2) Integrated car insurance covers all types of damages and liabilities caused by you or third parties. This includes damage due to accidents, vandalism, theft, fires, natural disasters, etc. You can increase your insurance coverage with these add-on covers for your car and bike insurances.

Travel insurance

Travel Insurance pays you compensation or pays for financial liability arising in case of medical and non-medical emergencies while you travel abroad or within the country.

There are two types of travel insurance.

 Single trip policy

It covers you during a trip that lasts for 180 days.

 Annual multi-trip

It covers several trips that take you within a year.

Travel insurance usually covers all the things that include -Loss of luggage, Emergency medical expenses, lost passport, Hijacking, Delayed flights, Accidental death, etc.

Home insurance

This type of insurance pays for or compensates for damages to your home due to natural disasters, man-made disasters or other threats. It covers liability due to fire, theft, theft, flood, earthquake and sabotage. It not only provides financial security to your home, but also takes care of the valuables inside the property.

Here are some common types of home insurance:

Standard fire and special hazard policy

It covers your home against fire outbreaks and special hazards. The risks involved are: - Natural disasters like lightning, floods, storms, earthquakes etc. - Damage due to overflow or rupture of water tanks, pipes etc. - Damage due to man-made activities like riots, strikes etc.

Home Structure Insurance

This protects the structure of your home from any kind of risk and damage. The cover also extends to permanent fixtures in the home such as kitchen and bathroom accessories. Public liability coverage Damage to another person or property inside the insured home can also be compensated.

Content insurance

It covers the interior contents of the insured home, usually covered, television, fridge, portable equipment etc. 

Fire insurance

Fire insurance compensates or compensates for damage to your property or products caused by a fire. It covers the cost of replacing, rebuilding or repairing the insured property as well as surrounding structures. It also covers third party property damage due to fire. In addition to these, it also takes care of the expenses of those whose livelihoods have been damaged due to the fire.

Types of Fire Insurance

Here are some common types:

Valuable principles

The insurer pays the value of the property and then takes the initiative to pay compensation up to that value in case of loss or damage. Floating policy it covers damage to property in various locations.

Extensive policy

This is known as the All-in-One principle. It has a wide coverage and has damage due to fire, theft, etc.

Specific policy

It covers you for a certain amount that is less than the actual value of the property.

How to buy insurance?

You can buy in four easy steps-

Step 1:

Know what you need.

 Understand the covers you need based on personal needs.

Get all the important details. For example, in the case of motor insurance, get details such as the date of manufacture of the car, details of the engine, etc. For health, check whether you need insurance for yourself or your whole family. This initial assessment will help you get an idea of ​​the coverage you need.

Step 2:

See options available Compare with the given benefits.

Check the add-ons provided.

Don't forget to drop.

Know what is the guaranteed amount? Are any additional services offered?

Step 3:

Choose the right plan Choose a plan that best suits your needs.

Reach your plan to the supplier.

Step 4:

Pay the premium

Fill out the application and pay the premium. You can do this online at the insurer's website.

You can also buy from a broker or dealership.

What doesn’t Life Insurance cover?

Your policy may not cover liability in certain circumstances. These are known as exceptions. Let's take a look at some of them:

Life Insurance does not cover its predefined conditions which is made at the time of purchasing the insurance

If one of the following causes occurs as a cause of death, such as:

- Alcohol or drug use

- War or terrorism

- Suicide or self

-inflicted injury

Car

- Complete negligence or carelessness to the car

- Causes damage if the policy is not active

- Damage to personal belongings kept in the car

- Damage to an uninsured vehicle causes damage while driving without a license

- Alcohol or drug damage while driving

- Damage due to war, insurgency or nuclear risk

Bikes

- Damage due to war, insurgency or nuclear risk

- Normal wear and tear and general aging

- Tire or tube punctures.

However, if your two-wheeler is damaged at the same time, you will be reimbursed 50% of the cost of repair or replacement

- Mechanical or electrical breakdown

- Any loss or damage outside India Health

- Hospitalization due to war or related activities

- Treatment conditions due to drug or hallucinogenic substance abuse

- No medical conditions exist before purchasing the policy while waiting

- Non-allopathic therapies such as acupuncture, yoga, natural medicine, etc.

- Diagnostic charges if reports do not prove the existence of the covered disease

- Self-inflicted injuries Travel

 - Travel against the doctor's advice

- Luggage delay for less than 24 hours

- Mental illness during your travels.

-Damaged injury

- War or civil unrest in international locations

- Participate in dangerous sports like bungee jumping, parachuting etc.

Home

- Deliberate destruction of property

- Damage due to wear and tear

- Damage caused by war

- Loss of money kept inside the property

- Loss of property that has been blocked for a period of time

Of Fire

Loss or damage to property:

- Nuclear danger

- War or related activities

- Pollution or contamination

- Mechanical or electrical breakdown

How much does insurance cost?

Your insurance costs depend on the amount of your premium. The amount of this premium depends on a variety of factors that separate insurance from insurance.

Take a look here:

Life insurance

Age

Health (past and present)

Your job

Type of coverage / plan

Your smoking and drinking habits

Assured amount

Motor / Auto Insurance:

Make-model of the car

Type of coverage / plan

The quality of your car, age

History of your claim

Travel insurance

Assured amount

Type of coverage / plan

Age

Your health status

Health insurance

Your family health history

Assured amount

Type of coverage / plan

Your age And gender and your health history

Home insurance

The size of your home Type of coverage / plan

The age of your home and the systems it contains the location of your home Assured amount. You can also use online calculators to check the amount of premium.

How to use insurance money?

You may request for the sum assured against your insurance policy. Give details about the damage you have done. It differs from insurance to insurance. Submit proof of bill, loss, damage, hospitalization etc. The insurance company will verify your claim. It will then pay the bill or pay you for your loss.

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