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Explained Guide on Insurance Types: General and Life Insurance

Insurance, in simple words, is a contract or agreement between two parties – an insurer (an insurance company) and an insured (a policyholder – a person or a group of people), wherein the insurer offers a compensation in form of the payment to the insured in case of occurrence of the covered loss.

The loss encountered with a policyholder may or might not exactly be financial. However, insurance companies try to reduce it to monetary conditions and give the insured with a pre-decided compensation whenever damage is incurred.

Types of Insurance

There are various types of insurance that individuals need to defend themselves and their belongings (living and non-living) against a number of threats and liabilities. This simple guide will help you learn about various types of insurance and facilitate you in finding yourself the best & most appropriate one. Let’s begin!

Life Insurance

Life insurance is a type of policy or contract between an insurance provider, or insurer, and a insurance planholder, which binds the insurer to pay a pre-determined amount of cash to the beneficiary as policy benefit as a swap for a premium (paid as a lump sum or regularly), typically, in case of the death of the planholder. Depending on the policy terms, a terminal illness or critical illness can also trigger the power. However, self-inflicted harm (suicide) is not offered any cover.

Term Insurance

Term insurance is a type of life insurance policy that comes with a pre-determined benefit for a limited coverage period. The coverage proposed by the insurance plan ends as soon as the policy term ends. After that, the insurance planholder can either let the coverage end or choose to renew it. This type of life insurance is also called Term Life Insurance. People often confuse the term ‘life insurance’ with ‘permanent life insurance’, which supplies very existence coverage.

As explained in the policy documents, term life insurance promises to provide a pre-determined benefit to the beneficiary in case of demise of the insurance policyholder during the policy term. Simply put, term life only offers death benefit and offers no maturity benefits if the insured outlives the insurance policy term. Since term life insurance offers coverage against the loss of life, additionally it is called Pure Life Insurance.

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The premium payable for term life insurance is at the mercy of health, sex, and age of a person; sometimes, the person (insurance-seeker) must undergo a medical examination before the policy is issued. The insurance plan might also require additional information, such as family health background, pre-existing diseases (if any), occupation, smoker or non-smoker status, etc.

Health Insurance

Health Insurance provides insurance coverage for cashless treatment/expense reimbursement in case of an illness or sickness which leads to hospitalization of the insured. The insurance carrier either provides cashless treatment at a network listed hospital or offers reimbursement for medical/surgical prices due to sickness or injury that lead to hospitalization. Medical health insurance offers tax benefits according to the TAX Act.

Family Health Insurance

A Family Health Insurance policy is a kind of medical insurance which covers two or more members of a family group against a single premium which is paid annually. In case more than one customers of a family fall sick and require inpatient hospitalization, the coverage covers expenses incurred on the procedure, such as outpatient medicinal expenditures. A family health plan is recommended for each and every family (husband, wife, or more to 4 children). Although it strictly associated with the policy, some family medical insurance plans let the inclusion of in-laws as well.

A Family Health Insurance plan provides coverage either in conditions of medical reimbursement or cashless treatment at a network hospital, subject to the policy underwriting.

Senior Citizen Health Insurance

A Senior Citizen Health Insurance policy means that the policyholder doesn’t have to handle a financial crisis due to a medical emergency, especially in the lack of a financial backup. This policy is highly recommended to those who are above 60 and either has retired or are retiring soon and are planning of living on some pension or interest income from a Checking account.

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A Senior Citizen Health Insurance policy is crucial because, following the age of 60, individuals are highly susceptible to ailments that can lead to immediate hospitalization, say for example a Heart attack, Asthma attack, etc. This insurance plan covers such medical ailments and protects the medical expenses arising from hospitalization.

Critical Illness Insurance

A critical illness insurance policy is a kind of health insurance plan wherein the insurance provider is liable to pay the complete sum assured as a lump sum to the policyholder, in the event he or she is diagnosed with a dread disease at the mercy of the policy underwriting. These insurance policies are often structured to give a regular payout to the policyholder while undergoing a serious surgical procedure, like a heart bypass surgery.

A Critical Illness Insurance policy differs from a Health Insurance policy in conditions of its sum assured payout. In case there are health insurance policies, when an individual is hospitalized, expenses incurred for the treatment are reimbursed by the insurer. Alternatively, the insurer is liable to pay the complete amount assured to the policyholder if a crucial illness is diagnosed.

Mediclaim Insurance

Mediclaim insurance takes care of expenses incurred on hospitalization due to an ailment, accident, or a medical surgery (if any), by giving the policyholder with either cashless hospitalization or bills reimbursement post-discharge from a healthcare facility. Therefore, a medisay insurance policy is recommended to every individual to safeguard their health.

There are mediclaim policies that manage both pre and post-hospitalization expenses related to the disease that resulted in the hospitalization. Although this period is insurer-specific, it usually is thirty days before hospitalization and ranges from 60 to 120 days post discharge.

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Motor Insurance

Motor insurance provides insurance coverage to cars, bikes, trucks and other automobiles plying on the roads. It provides coverage against vehicle damage or loss due to natural as well as man-made perils. According to the law, it is compulsory for each and every vehicle owner in India to buy motor insurance for his/her vehicles; he/she will be fined otherwise.

Travel Insurance

Travel insurance safeguards the insured from unforeseen circumstances such as flight delay/ cancellation, missed connection, trip cancellation, loss/delay of checked-in baggage, passport loss and any medical emergency when he/she is on a journey.

Home and Property Insurance

It provides insurance coverage to your home or property for the damages as a result of natural as well as man-made catastrophes. It provides insurance plan to the contents combined with the structure of your house/property.

Personal Accident Insurance

It provides insurance coverage against accidental death or disability in the event the insured person meets with a car accident. Accidents, especially major ones, have monetary repercussions. In case there is death, personal accident insurance offers a financial cushion to the insured’s family.

Cancer Insurance

It provides special insurance coverage and financial support to the individuals identified as having cancer following the free lookup period (according to the selected plan) has ended. The premium paid towards cancer insurance is qualified to receive tax benefits according to section 80D of TAX Act.