Different Types of Insurance: Definition and Types | Bharti AXA Life (2024)

What is the Definition of Insurance?

Insurance is a legal contract between a person and an insurance business in which the insurer promises to provide financial protection (Sum guaranteed) against unforeseen events for a certain price (premium). The many types of insurance plans available today may be grouped into two groups :

• Life Insurance
• General Insurance

1. General Insurance

Some of the kinds of general insurance offered in India are as follows :

• Health Care Coverage
• Automobile Insurance
• Homeowners' Insurance
• Insurance against fire
• Insurance for Travel

2. Life Insurance

Life insurance comes in a variety of forms. The most prevalent types of life insurance policies offered in India are as follows :

• Term Life Insurance
• Unit-Linked Insurance Plans
• Whole Life Insurance
• Endowment Plans
• Child Plans for Educations
• Retirement Plans

Let's take a closer look at the many kinds of insurance policies :

General Insurance

General insurance plans are one of the types of policies that provide coverage in the form of sum assuredagainst damages besides the policyholder's demise. In general, general insurance refers to a variety of insurance plans that provide financial protection against losses caused as a result of liabilities such as a bike, automobile, house, or health. The following are examples of several types of general insurance policies :

Health Care Coverage

Health insurance is a form of insurance policy that covers the costs of medical treatment. Health insurance policies either cover or repay the cost of treatment for any included disease or injury. Various forms of health insurance cover a wide range of medical bills.

It typically provides defence against :

• Inpatient care
• Critical illness treatment
• post-hospitalization medical bills
• Procedures for day-care

A few types of health insurance policies also cover resident care and pre-hospitalization costs. The following are some of the several types of health insurance policies available in India :

1) Individual Health Insurance

Provides coverage to a single person.

2) Family Floater Insurance

This type of insurance allows your complete family to be covered under one policy, which often includes the husband, wife, and two children.

3) Critical Illness Coverage

A sort of health insurance that covers a variety of life-threatening illnesses such as stroke, heart attack, renal failure, cancer, and other comparable conditions. When a policyholder is diagnosed with a serious illness, they get a lump sum payment.

4) Senior Citizen Health Insurance:

These insurance policies are designed for people over the age of 60.

5) Group Health Insurance

This is a type of insurance that a business provides to its employees.

Also Read: Discover the untapped potential of tax concepts in life insurance for unparalleled financial security.

Automobile Insurance

Motor insurances are forms of insurance that provide financial help in the event that your automobile is involved in a crash. In India, there are several types of motor insurance coverage available, including :

1) Car Insurance

This plan covers privately owned four-wheelers. There are two kinds of automobile insurance plans: third-party insurance and extended coverage policies.

2) Bike Insurance

These are forms of automobile insurance that protect privately-owned two-wheelers in the event of an accident.

3) Commercial Vehicle Insurance :

A sort of automobile insurance that covers any vehicle utilized for commercial purposes.

Homeowners' Insurance

A homeowner’s insurance, as the name implies, provides full coverage for the belongings and infrastructure of your property against physical destruction or damage. In other words, house insurance protects you from both natural and man-made disasters such as fire, earthquake, tornado, burglary, and robbery.

The following are examples of several types of house insurance policies :

1) Home BuildingInsurance

Serves to protect the house's foundation from destruction in the event of a disaster.

2) Public Liability Coverage

Protects the insured residential property from any harm caused by a visitor or third-party while on the premises.

3) Standard Fire and Special Perils Policy

Protection against fires, natural disasters (e.g., earthquakes, landslides, andstorms, and floods), and anti-social human-caused activities (e.g.,strikes, and riots)

Life Insurance

Life insurance policies provide protection against unforeseen circ*mstances such as the policyholder's death or incapacity. Aside from providing financial security, many types of life insurance plans enable policyholders to optimize their savings by making recurring payments to various equity and debt fund alternatives.

You may get a life insurance policy to protect your family's financial future against the ups and downs of life. The insurance coverage includes a substantial sum that will be paid to your loved ones if something occurs to you. Based on your financial needs, you may pick the length of the life insurance policy, the amount of coverage, and the payment choice. The following are the many types of life insurance policies :

• Term Life Insurance
• Unit-Linked Insurance Plans
• Whole Life Insurance
• Endowment Plans
• Child Plan for Educations
• Retirement Plans

1. Term Life Insurance

Term insurance is the purest and most inexpensive type of life insurance, allowing you to choose a high level of coverage for a certain period of time. With a low-cost term life insurance policy, you can protect your family's financial future (term insurance plans generally do not have any cashvalue, and thus, are available atlower rates of premium as compared toother life insurance products.)

If you die within the policy time, your nomineeswill get the agreed sum Assured, depending on the payment type you choose (some term insurance plans offer multiple payout options as well)

2. Whole Life Insurance

Whole life insurance plans, often known as 'conventional' life insurance plans, give protection for the policyholder individual's complete life (typically till age 100), as opposed to any other type of life insurance that only provides coverage for a set number of years.

While a whole life insurance policy pays a death benefit, it also has a savings component that helps the policy accumulate cash value over time. Whole life insurance policies have a 100-year maturity period. If the insured person survives beyond the maturity age, the entire life insurance policy becomes a matured endowment.

3. Endowment

Endowment plans fundamentally give financial protection against life's risks while also allowing policyholders to save consistently over a certain length of time. If the policyholder survives the policy term, the endowment plan matures, and the policyholder receives a lump sum payment.

If something occurs to you (as the life insured), the life insurance endowment policy pays your family (beneficiaries) the whole sum assured.

4. Unit-Linked Insurance Plan (ULIP)

ULIPs are insurance policies that combine investment and insurance advantages into one contract. A portion of your payment for a Unit Linked Insurance Plan is invested in a range of market-linked equities and debt instruments.

The leftover premium is used to provide life insurance coverage for the duration of the policy. ULIPs provide you with the freedom to allocate premiums to different instruments based on your financial needs and market risk tolerance.

5. Plans for Children

Child plans are life insurance policies that assist you in financially securing your child's life goals, such as higher education and marriage, even if you are not there. To put it another way, child plans combine savings and insurance benefits to help you prepare for your child's future requirements at the appropriate age.

The money obtained on maturity can be utilized to help your child meet his or her financial needs.