5 Major Types of Insurance Coverage

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Insurance policies can cover medical expenses, vehicle damage, business losses, and accidents while traveling, among other things. The two major types of insurance coverage are life insurance and general insurance. General Insurance is further subdivided into sub-categories that group together various types of policies. They are as follows:

1. Insurance for life

Life insurance can be purchased to protect a family in the event of premature death or death during the policy's term. When the insured person dies unexpectedly, the family receives a lump sum. This enables the bereaved family to deal with financial difficulties that may arise in the absence of a breadwinner.

Is term insurance equivalent to life insurance?

Term insurance is the most common type of life insurance in which you pay a premium for a set period of time. If you die during the term period, the money you are insured for is given to your family. However, if you survive the term policy's duration, it is retained by the insurance company. In contrast to term plans, whole life insurance or endowment plans pay out if you outlive the term. Some pension plans, also known as post-retirement plans, include insurance coverage. One option is to pay the premium up to a certain point in time. When the loan matures, you receive the promised amount. The money is paid to the insured's family upon his or her untimely death.

What exactly is a Unit Linked Insurance Plan?

A Unit Linked Insurance Plan is a type of investment-cumulative insurance plan. The premiums cover coverage as well as the purchase of market-linked equity, debt, and other instruments. Apart from the life insurance provision, this has the potential to provide an opportunity for wealth creation.

Section 80C provides tax benefits for life insurance coverage plans. 2. General Insurance

Non-life insurance policies are classified as general insurance policies, which include the following insurance coverages: home, auto, education, and so on.

1. Medical Insurance

You can purchase health insurance for yourself or your family, which could include your spouse, parents, siblings, and children. Some insurance companies have strategic alliances with hospitals. So, in this case, you can use your policy number to get cashless services at in-network hospitals. In some cases, you may be able to receive reimbursement for hospitalization and treatments. Check the type of disease/illness/health issue's coverage. Check to see what types of costs are covered as well.

2. Education Coverage

Education insurance can also be used as a form of investment. You pay premiums until your child reaches the age of 18 or the age specified in the insurance policy. You can have a lump sum with regulations imposed that you can use for a

3. Property/Home Insurance

If a natural or man-made disaster damages your valuable property, this policy can cover the financial loss and provide monetary assistance. Losses caused by theft, floods, or other disasters can be mitigated.

4. Automobile/Vehicle Insurance

This is one of the current mandatory policies. To begin with, it protects your valuable asset from road accidents or other damage and covers the losses. Second, traffic laws require you to carry proof of insurance while driving.

5. Travel Protection Insurance

When you book a train or an aero plane ticket, you may notice that you have the option to purchase insurance for a low cost. If you are a frequent flyer, especially if you travel internationally, you can also purchase travel insurance. You can file a claim if your luggage is lost, your trip is cancelled, or your flight is delayed.

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Apart from the types of insurances discussed above, there are miscellaneous insurance coverage policies for furniture, goods, machines, etc. Other types of insurance include Fire Insurance (for fire damage), Marine Insurance (for cargo ships), Tenant Insurance, Landlord's Insurance, and so on. Group Medical Insurance Policies frequently cover employees of an organization if it has any.

To summaries, having insurance prevents you from burning a hole in your pocket during unprecedented times. It compensates you financially for your losses and damages. The primary function of all insurance policies is to provide damage control to the insured by bringing in a large number of people who pay to cover their risks. The fund is also used for capital formation by investing in the markets. This allows insurance companies to continue operations and settle/adjust insured people's claims. It also stimulates the economy.

What are the tax advantages of insurance policies?

The tax advantages of insurance plans vary depending on the type of insurance and the policy. However, most life insurance policies provide tax exemption up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Section 80C exempts health insurance policies for self and parents in certain circumstances.

What is the most important type of insurance coverage?

All insurance coverages are important, but what is prioritised depends on the individual and their circumstances. It is critical to have health insurance and to insure all of your vehicles.

What is the distinction between general and life insurance?

General insurance is typically short-term and renewable after a year or more. Life insurance policies are long-term contracts for which you pay premiums for the rest of your life. Life insurance claims are settled after the insured's maturity or death, whereas general insurance coverage claims are settled when a specific event occurs, such as an accident for vehicle insurance or property damage for home insurance.