What Are Different Types of Insurances?

We hear about different types of insurance policies on routine basis either it is from a colleague who has recently purchased a car or from a friend who is always worried about the future of his family. Sometimes we feel that we don’t exactly know what these policies really are and what benefits they offer. Before knowing about the insurance policies we need to understand the basic terms most commonly used.

Insurer:  the insurance company

Insured: You (the policyholder)

Life is full of risks and we can’t avoid most of them; either it is driving a car with a risk of accident or falling ill due to weather changes. These risks range from loss of property to loss of life. We want to have some kind of backup, so that in case we come across these risks we get compensated. When we think about a backup, we think about insurance.

There are different types of insurance.

 Types of Insurance

  • Life Insurance
  • Property Insurance
  • Social Insurance
  • Mortgage Insurance
  • Auto Insurance
  • Pet Insurance
  • Liability Insurance
  • Disability Insurance
  • Fire Insurance
  • Health Insurance

Life Insurance:

Life insurance is a contract between an insurance company and a policyholder in which the insurance company guarantees payment of a death benefit to named beneficiaries upon the death of the policyholder. Life insurance is not only limited to the death of the policyholder, it can also be related to the retirement or disability, depending upon the type of life insurance policy. The promised benefit by the insurance company is in consideration of the premium paid by the insured.

Life Insurance

There are different types of life insurance.

  1. Whole Life Insurance
  2. Term Life Insurance
  3. Pension Plans
  4. Endowment Policy
  5. Money Back Policy
  6. Unit-Linked Insurance Plan
  7. Child Policy

How much does Life insurance Premium cost?

The premium amount depends on multiple factors that vary from insurance to insurance.

  • Age
  • Health (past and current)
  • Your occupation
  • The type of coverage/plan
  • Your smoking and drinking habits
  • The sum assured

 

Property Insurance:

Home always has a great value in our life. If home is damaged, it will cost us huge. Depending upon the severity of the damage, we might not be able to live in it while repairs are being made. Home insurance can be of great value in such instances. So we should have a good property insurance that can also cover the home owner.

If we are tenants, we should opt for rental insurance, since the property insurance policy of the landlord only covers the structure and the land, but not the other contents of the property.

The crops can also be insured against an unexpected decline in production, livestock can also be insured against unexpected death of animals, industrial machinery can also be insured against any break-down or theft.

Social Insurance:

The weaker sections of the society are unable to pay the insurance premiums to get insured. Such people are given protection under social insurance.

There are various forms of social insurance.

Pension Plans

Disability Benefits

Unemployment Benefits

Sickness Insurance

Industrial Insurance

 

Mortgage Insurance:

Mortgage insurance saves your family from paying off your mortgage in the event of your death. Most banks and mortgage companies have made it compulsory to get mortgage insurance when you apply for mortgage.

Auto Insurance:

Auto insurance is not only required because it is mandatory under the law of every state, but you need car insurance if you have a car. Because in case of accident, you will require auto insurance to get your car repaired or replaced without bearing huge financial loss.

Moreover if the accident is due to your fault, your auto insurance policy will cover the medical bills and property damage and will save you from a financial disaster.

Pet Insurance:

As expensive medical techniques and medicines are being increasingly employed in veterinary medicine, and the expectations of the pet owners are also getting higher for their pets’ health care and living standard, the pet insurance market is increasing.

Depending upon the policy, pet insurance covers the treatment cost of the insured pet, if it gets ill or injured. Some pet insurance policies also pay out if the pet dies, or if it is lost or stolen.

Liability Insurance:

If your negligence or the condition of your property is found to cause someone to be injured or killed, or someone’s property is damaged or destroyed, or they suffer loss due to relying on your services or advice; Liability insurance protects you against financial loss under such circumstances.

Liability insurance is of three types:

  • Public liability
  • Professional indemnity
  • Product liability

 

Disability Insurance:

If a worker is unable to perform his/her work and earn money due to some disability, he/she can get a disability benefit depending upon rules set by the organisation and the type of disability insurance.

The rules of organisation and the type of disability insurance define that what constitutes a disability and how a worker can qualify to receive the benefit.

Disability insurance policies can be of two types.

Short term disability insurance policy offers a portion of a worker’s salary if he/she is unable to work for a short period of time – three to six months.

Long term disability insurance policy offers a portion of worker’s salary if he/she is unable to work for a period over six months.

In both types of disability insurance policies the worker must be disabled for a certain period before he/she becomes eligible to get the benefit; this period is called elimination period. If the worker resumes work before the elimination period is over, he/she will not get the benefit.
Fire Insurance:

It is a kind of property insurance that covers the damages and losses caused by fire. In addition to homeowner’s or property insurance, fire insurance helps to cover the cost of replacement, repair or even reconstruction of the property. However, fire insurance does not cover situations such as war, nuclear risks and similar situations.

Health Insurance:

If you have not got health insurance, you may be one hospital stay away from bankruptcy. Health insurance will cover some of the rising costs of health care, especially when it comes to major health needs.

If you have a chronic condition where you need a ling term treatment, health insurance will help you better afford the medical care you need.

It can be a good idea to have a health insurance policy even if you are in good health. It will help you to meet the medical expenses just in case you face an accident, or diagnosed with some major medical problems.

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Author: Inspired Trait

Analysing the Chemicals of Motivation and Inspiration; and researching to balance the Chemical Equation of Inspiration and Productivity.

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