A detailed guide about different types of Insurance Policies. Unplanned expenses in life are a sad reality. Even if you believe you’re financially secure the unexpected expense could significantly impact your security. The severity of the situation, such circumstances could also make you in debt.
Although you can’t plan ahead for the eventualities that arise from the occurrence of such events insurance policies can provide some form of protection to limit financial risk from unexpected events.
There are a variety of insurance plans, each is designed to safeguard specific aspects of your health or your assets.
There are eight kinds of insurance, including:
- Life Insurance
- Motor insurance
- Health insurance
- Travel insurance
- Property insurance
- Mobile insurance
- Cycle insurance
- Bite-size insurance
Just knowing about the various insurance policies won’t aid. It is better to know the way each plan functions.
If you do not have the proper knowledge of each one in the first place, you might not be able to protect your money and the financial security that your loved ones. Find out everything you should know about different insurance policies.
What is Life Insurance And Types of Life Insurance Policies?
Life Insurance alludes to an approach or cover by which the policyholder can guarantee independence from the rat race for his/her relatives in the afterlife. Assume you are the sole acquiring part in your family, supporting your life partner and youngsters.
On such an occasion, your demise would monetarily pulverize the entire family. Life insurance approaches guarantee that something like this doesn’t occur by giving monetary help to your family in case of your passing.
There are principally seven unique kinds of insurance strategies with regard to life insurance. These are:
- Term Plan
- Endowment Plan
- Unit Linked Insurance Plans or ULIPs
- Whole Life Insurance
- Child’s Plan
- Retirement Plan
- Term Plan – The passing advantage from a term plan is just accessible for a predetermined period, for example, a long time from the date of strategy buy.
- Enrichment Plan – Endowment plans are life insurance arrangements where a part of your expenses go toward the demise benefit, while the leftover is contributed by the insurance supplier. Development benefits, passing advantages, and intermittent rewards are a few kinds of help from gift strategies.
- Unit Linked Insurance Plans or ULIPs – Similar to enrichment designs, a piece of your insurance expenses go toward shared reserve ventures, while the leftover goes toward the passing advantage.
- Entire Life Insurance – As the name proposes, such arrangements offer life cover for the entire life of a person, rather than a predefined term. A few backup plans might limit the entire life insurance residency to 100 years.
- Kid’s Plan – Investment cum insurance strategy, which gives a monetary guide to your youngsters all through their lives. The demise benefit is accessible as a single amount installment after the passing of guardians.
- Cash Back – Such approaches pay a specific level of the arrangement’s total guaranteed after normal stretches. This is known as endurance benefit.
- Retirement Plan – Also known as annuity designs, these strategies are a combination of venture and insurance. A piece of the expenses goes toward making a retirement corpus for the policyholder. This is accessible as a singular amount or regularly scheduled instalment after the policyholder resigns.
Benefits of Life Insurance
If you own an insurance policy for life and you are a member of the policy, you will take advantage of the following benefits from the policy.
If you pay premiums for life insurance that are paid, you can claim tax advantages in India as per the sections 80(C) as well as 10(10D) in the Income Tax Act. This means that you could save significant dollars in taxes by choosing an insurance policy that covers life.
Encourages Saving Habit –
Because you have to pay premiums for the policy purchasing insurance policies encourages the practice of saving money.
Secures Family’s Financial Future –
This policy will ensure the financial security of your family remains intact even when you die.
Helps Plan Your Retirement –
Life insurance policy policies can also serve as investments. For example, pension plans provide an instant lump-sum payout when you retire, which can help you save for retirement.
What is Motor Insurance And Types of Motor Insurance Policies?
Insurance for motor vehicles is a type of policy which provide financial aid in the event of an accident that involves your bike or car. Motor insurance is available for three types of motorized vehicles, which include:
- Car Insurance – Four-wheelers owned by individuals are covered by this policy.
- Two-wheeler Insurance – Personally owned two-wheelers such as scooters and bikes are covered under these plans.
- Commercial Vehicle Insurance – If you have a car which is used for commercial purposes it is essential to take advantage of insurance that covers the same. These policies guarantee that your commercial vehicles remain in good condition and reduce the risk of losses.
Types of Motor Insurance Policies
Based on the level of protection or cover offered, motor insurance policies can be classified into three different types which are:
- Third-Party Liability – This is the simplest type of motor insurance coverage in India. This is the minimum compulsory condition for all motorized automobile owners as stipulated by the Motor Vehicles Act of 1988. Because of the lack of financial assistance available, insurance premiums also typically are lower. They only cover the financial responsibility to the party who is liable for the mishap and ensure that you do not have legal issues because of the incident. However, they don’t provide any financial aid to repair the vehicle of the policyholder after an accident.
- Comprehensive Cover – In comparison to the third-party liability option comprehensive insurance plans provide better security and protection. In addition to covering third-party obligations, they will also pay for the costs to repair the damage to the vehicle of the policyholder in the event of an accident. Furthermore, comprehensive plans provide a cash payout in the event that your vehicle suffers damage caused by fire, man-made natural catastrophes or riots, among other situations. In addition, you are able to recover the cost of your vehicle if it’s stolen, if you have a comprehensive insurance policy in place. There are additional options with their comprehensive motor insurance policy to enhance the overall coverage. These add-ons can include zero depreciation coverage as well as protection for the engine and gearbox cover, consumable coverage and breakdown assistance, among others.
- Own Damage Cover – The Own Damage Cover is a special type of motor insurance that insurance companies offer to customers. Additionally, you’re qualified to take advantage of this plan only if the purchase the car or two-wheeler on or after September 18, 2018. The car must be new and not an old one. It is important to be aware that you are able to benefit from this separate own damage insurance just if have a third-party auto insurance liability policy. If you have your own insurance you will basically get the same benefits as a full policy, but without the third party liability part in the insurance policy.
Benefits of Motor Insurance Policies
The cost of bikes and cars is becoming more expensive each day. In this scenario having no insurance could result in severe financial losses to the proprietor. Below are some benefits that come with purchasing an insurance plan.
Prevents Legal Hassle –
This will help you avoid any penalties for traffic violations and other legalities you might otherwise have to deal with.
Meets All Third-Party Liability –
If you hurt someone or cause damage to the property of someone else in an auto accident The insurance policy will help to cover the financial losses effectively.
Financial Assistance to Repair Your own Vehicle –
After an accident, you will have to shell out a significant amount to repair your vehicle. Insurance plans cover expenses out of pocket which allows you to complete repairs as soon as you can.
Theft/loss cover –
When your automobile is stolen and your insurance policy is unable to assist you in reclaiming a portion of the cost of your vehicle or bike. You will also receive similar help when your vehicle is damaged beyond repair because of accidents.
In addition, people that own commercial vehicles or two-wheeler may also benefit from tax deductions by paying the premiums for the vehicle.
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