What are the categories of insurance?


Insurance is that the cornerstone of monetary planning, within which you, your dependents and your assets are shielded from loss within the event of an unfortunate event, during this post you’ll find out about the spread of insurance.

The concept of insurance is extremely simple where you pay a hard and fast amount to the insurer called premium which successively provides a coverage and pays a predetermined amount for the loss.

Based on your insurance cover, insurance is split into life assurance and general insurance. Here you’ll find an in depth explanation of both these varieties of insurance and their various aspects.

Here during this article an in depth answer to each question associated with insurance has been given like –

What is life insurance?
Life insurance is one in all the foremost important financial tools that help your family to stay financially independent, clear liabilities taken within the style of debt, maintain lifestyle and keep important life goals on the proper track. , Is.

In life assurance, just in case of premature death of the policyholder within the policy term, the insurer pays the sum assured to the nominee’s family.

types of life assurance
1. Whole life assurance
2. Term insurance
3. Endowment Plan
4. Money-Back Policy
5. Unit Linked Insurance Plans

1. Whole life assurance –
This insurance plan provides you a coverage for the full life. The term of the insurance for such plans is up to 100 years and therefore the benefits of the policy continue till the premium is paid. If one wants to continue with this insurance plan for keeps, then taking an entire life assurance plan may be a excellent option.

2. Term life assurance –
Term life assurance may be a pure protection plan that provides plenty of coverage at a reasonable premium. In insurance, the sum assured is paid by the nondepository financial institution just in case of death of the insured within the stipulated term of the policy. The sum insured received helps the insured’s family to satisfy their daily expenses and pay off the loan. Term plans allow one to settle on the sum assured at 15-20 times the annual income.

3. Scheme of Endowment –
Endowment plan could be a plan of investment and insurance in an exceedingly single product to hide life also as essential life goals. during this plan, a particular a part of the premium goes as Sum Assured, while the remainder is invested in an exceedingly less risky avenue i.e. a business.

In case of death of the insurer during the term of the contract, the nominee of the insurer receives the sum assured. This endowment plan meets the necessities of both insurance and investment simultaneously.

4. a refund Policy –
In this plan a hard and fast amount is paid out at pre-determined intervals during the term of the insurance, the balance amount is insured with endowment plans of cash back policies. as an example, if a money-back policy is taken for a term of 20 years, a specific amount are often paid at the tip of the 5th, 10th and 15th year of the policy term, and to finish this insurance are available for Policy. However, the complete profit is paid out together with the bonus.

5. Unit Linked Insurance Plan (ULIP) –
In this too, like endowment plans, a particular a part of the premium goes towards providing life cover and another part is invested within the markets to earn returns. These plans provide a chance to earn capital out of the box by investing during a single product and investing in insurance still as life assurance and a range of risky funds.

A ULIP plan works sort of a a refund insurance plan, and also provides the power of switching from one fund to a different.

What is general insurance?
Unlike life assurance, general insurance includes insurance for non-living property like home, vehicle, health, travel, flood, fire, theft, road accident and man-made calamities.

1. Home Insurance
2. Motor Insurance
3. Travel Insurance
4. insurance

1. Home Insurance –
A home contract protects your home and its contents from damage caused by humans and natural calamities. Some home insurance policies provide you with coverage for temporary rent expenses during your home renovation.

2. Motor Insurance –
As the name suggests, this insurance is for vehicles that provide you coverage just in case of auto accident, vehicle damage, vehicle theft, vandalism etc.

There are two varieties of this insurance, third party and comprehensive, during which third party motor insurance takes care of third party damages just in case of an accident caused to your vehicle. automobiles Act, 1988 consistent with this, it’s mandatory for each vehicle plying on the road to own third party insurance.

Comprehensive motor contract, on the opposite hand, covers you from both third party damages and own damages, on damages caused thanks to flood, fire, riot, etc.

3. Travel Insurance –
If you’re traveling abroad, a travel insurance covers your losses because of loss of bags, flight delays and trip cancellations. In some cases, if you’re hospitalized during the trip, you’re treated by the insurance firm on account of travel insurance within the hospital.

4. insurance –
Health insurance covers out-of-pocket expenses just in case of medical emergencies. A insurance plan is an indemnity plan that pays for hospitalization expenses.

An policy for the whole family is additionally taken during this plan, which provides coverage for the treatment of any member of the family. On the opposite hand, critical illness plans which are fixed benefit plans offer a bigger amount for the diagnosis of a selected kind of illness.