TYPES OF INSURANCE

There are different types of insurance. And this is the main focus of this article. Here, we shall take you through these types of insurance, its meanings, types, as the case may be, advantages and disadvantages etc. Broadly, there are 8 types of insurance, namely:

Life Insurance

Property insurance

Travel insurance

Motor insurance

Health insurance

Mobile insurance

Cycle insurance

Bite-size insurance

We shall now take you through the processes of knowing how the various insurance policies or plans work.  This is because without adequate knowledge of their workings, you may not be able to protect your finances and as well as negotiate adequately for the policies

Life Insurance

Life insurance is a type of insurance policy between an insurer and a policyholder. It is a legally binding contract that pays a death benefit to the policyholder’s beneficiaries upon death. A life insurance policy guarantees the insurer pays a sum of money to certain beneficiaries when the he dies in exchange for the premiums of the policyholder during his lifetime. It is a class of insurance that pays out a sum of money either on the policyholder’s death or after a set period.

For a life insurance policy to remain in force, the policyholder must pay a single premium upfront or pay regular premiums over time. When the he dies, the policy’s beneficiaries will receive the policy’s face value, or death benefits.

The essence of this policy is that in the event of death of the policy holder, the beneficiaries or the dependents may be lacking financially and this would devastate the whole family. Life insurance policies ensure that such a thing does not happen. This it does by providing financial assistance to your family in the event of your death.

Types of Life Insurance Policies

There are different types of life insurance policies and some of them includes;

Term life Plan 

This is the type of life insurance lasts a certain number of years. You choose the term when you take out the policy. The terms may be 30, 20 or 10 years. This means that the insurance benefits can only be payable after the expiration of the term of the policy.

Endowment Plan

Here, a certain percentage of your insurance premiums go towards the death benefit, while the insurance company invests the remaining in a productive venture. In this type, you will be able to reap from the investments by your insurers, death benefit and even some periodic bonuses that may accrue to you.

PERMANENT LIFE INSURANCE

This is the type of life insurance policy that lasts for entire life of the policyholder unless he stops paying the premiums or surrenders the policy. It’s typically more expensive than term life policy.

Whole Life Insurance 

As the name suggests, such policies offer life cover for the whole life of an individual, instead of a specified term. Some insurers may restrict the whole life insurance tenure to 100 years.

Child’s Plan 

This serves as an investment and as well as an insurance policy, which provides financial aid for your children throughout their lives. It equally provides a lump-sum payment after the death of parents.

Money-Back

This is the type of life insurance policy that makes it possible for the policyholder to receive a certain percentage of the insured sum at a certain regular intervals. It is otherwise known as survival benefit.

Retirement Plan

This is also known as pension plans. It serves as an investment and insurance. Thus, a portion of the insurance premiums goes toward creating a retirement sum for the policyholder. The benefits can be made available to the policyholder by way a lump-sum payout or monthly payment after retirement.

Benefits of Life Insurance

Payouts are tax-free. Death benefits are paid as a lump sum and are not subject to federal income tax because they are not considered income for beneficiaries.

Dependents don’t have to worry about living expenses. Most policy calculators recommend a multiple of your gross income equal to seven to 10 years that can cover major expenses like mortgages and college tuition without the surviving spouse or children having to take out loans.

Funeral expenses can be significant and mind blowing but can be taken care of with a burial policy or with standard term or permanent life policies.

Permanent life policies such as whole, universal, and variable life insurance can offer cash value in addition to death benefits.

 PROPERTY INSURANCE

This is the type of insurance policy that serves to provide insurance coverage to our building or immovable structures and personal effects. Moreover, commercial buildings can also be insured through this medium. If any damage happens to the property, you can claim financial assistance from the insurer.

Types of Property Insurance

Here are some types of property insurance policies available in India:

Home insurance

This is the type of property insurance that provides insurance coverage to our homes. With this type of insurance policy, you remain free from all financial liabilities that may arise from damage to your home and the personal belongings in the home. The damage can be as a result of fires, burglaries, storms, earthquakes, explosions and others.

Shop insurance 

Usually, our shops act as our daily source of income for the sustenance of our families.  Therefore, it is important protect yourself from financial liability arising from the damage to same. This is notwithstanding that the damage may occur due to natural calamities or due to accidents.

Office Insurance 

Office insurance is a type of policy that ensures your office building and all the equipment inside enjoy insurance coverage in the event of unforeseen events. This type of insurance coverage is important owing to the fact that office spaces usually contain expensive equipment, such as computers, servers and important documents and much more.

Building Insurance

As a result of the fact that home insurance may not be adequate, building insurance becomes inevitable. This is the type of property that operates to cover the building and the entire surroundings.

 Benefits of Property Insurance

Property insurance protects the policyholders against financial liabilities from fire incidents.

It also protects owners of properties against theft from burglars.

There is coverage against the incidences of flood. These floods can ravage your property leading to substantial economic losses.

It also offers insurance protection against incidences and damage arising from natural calamities. These calamities may be earthquakes, storms and others.

Rebuilding or renovation of a property is immensely expensive. Thus, property insurance policies are the best option to ensure long-term financial health.

MOTOR INSURANCE

This is the types of insurance policies that offer financial assistance in the event of accidents involving your car, bike or even third parties. Motor insurance is available to three categories of vehicles such as cars, three-wheelers and commercial vehicles. There is car insurance for personal privately used vehicles, two wheeler for personal owned ones like bikes, scooters and commercial vehicles insurance for vehicles used for commercial purposes.

Types of Motor Insurance Policies

Third-Party Liability 

This is the most common class of motor insurance. It is the minimum mandatory requirement for all vehicles. In almost all jurisdictions, it is compulsory to buy third party liability car insurance. This policy serves to protect third parties affected by vehicle accidents ensuring that you do not face legal hassle as a result of such mishap.

Comprehensive Cover 

Comprehensive provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees and other hazards—even getting hit by an asteroid!

Own Damage Cover 

This is the type of motor insurance policy that provides insurance cover for vehicle owner’s own damages sustained by the insured car as a result of accidents, earthquakes, fire etc.

Benefits of Motor Insurance Policies

Helps you avoid legal hassles or traffic fines and other legalities that you would ordinarily pay or bear.

It equally help you meets all third-party liability when you injure a person or damage someone’s property as a result of accident. The insurance policy helps you pay for the losses.

The policy also provides financial assistance to the policyholder to repair your own Vehicle that is damaged as a result of accident.

There is coverage for theft/loss if your vehicle is stolen. Here, the insurance policy will help you reclaim a portion of the market price.

TRAVEL INSURANCE

This is the type of insurance policy that covers risks in relation to movement from one place to another.

Travel insurance coverage operates to provide indemnity against risks with travelling such as trip cancellation, loss of luggage, medical emergencies, and lots more.

Travelling has become an inseparable aspect of human existence, be it business trips, tours, etc. And as enjoyable travelling can be, misfortunes can befall you in the course of travelling and it is at this point of misfortune or eventualities that travelers insurance steps into provide indemnity to mitigate these calamities. Travelers insurance is good as it affords us protection from unexpected circumstances.

Types of travel insurance

Domestic travel insurance

This is the kind of travel insurance policy that provides insurance coverage for travels within the same jurisdiction or country.

 International Travel Insurance 

This is the type of travel insurance that provides protection for travels outside your country. In other words, when you are travelling to another country. This policy allows you to cover the unforeseen expenses that can arise during your trip like medical emergencies, baggage loss, loss of passport, etc.

Home Holiday Insurance 

This plan is important when you are travelling for vacations with family and it serves to protect your home which remains unguarded and unprotected. Chances of burglary are always significant, which may lead to significant losses. These plans are always inclusive in your travel policies to protect you from such eventualities.

Benefits of Travel Insurance

Lost, stolen or delayed baggage: most often, personal luggage get lost or sustain damages in the course of travel. However, with a traveler’s insurance policy in place, the transporter under fault of theirs is liable to indemnify you. And covers the cost of replacing the lost or damaged luggage. And other personal effects. It equally provides coverage against baggage delay to enable the insured have access to money to replace essential things affected by the delay pending when the delayed luggage arrive as well as provision of coverage for additional expenses like cost of meals and accommodation occasioned by travel delays.

Flight accidents coverage: this is the protection afforded against accidents in the course of your flights and covers medical emergence.

Accidental death coverage: Accidental death equally occurs during flights made by commercial as lines. If accidents result in death of the traveler who has bought insurance policy or coverage, the insurance company will pay the benefits accruable to the policy to the dependents or beneficiaries of the policy holder.

Medical Coverage: medical coverage to travelers entails coverage in the event of injuries or emergency medical evacuation and covers medical expenses.

Cancelled trips: the incidences of cancellation of trips represent one of the major reasons for subscribing to travel insurance and this is to enable you in the event you have to make fresh travel air arrangement

HEALTH INSURANCE

This is the kind of insurance policy which provides financial assistance to policyholders when they are sick and are in the hospitals for treatment. Often times, some plans also cover the cost of treatment undertaken at home before hospitalization.

Types of Health Insurance policies

There are types of health insurance policies available and they include;

Individual health insurance policy

These are health insurance plans that offer medical cover to just one policyholder only

Family health Insurance 

These policies allow you to avail health insurance for your entire family

Critical illness policy

These are specialized health plans that provide extensive financial assistance when the policyholder is down with certain chronic illnesses. These plans provide a lump-sum payout to the policyholder. Senior citizens health insurance

This is a health insurance policy available to individuals of age 60 years and above.

Group health insurance

These are policies usually offered to employees of an organization or company. This is the type of policy that provides coverage for a specific group of persons or individuals. This type is mostly used by employers who buy group medical insurance policy for all employees. Although this type of policy is not as expensive as the individual insurance policy, it however does not cover as much items of insurance as that of the individual medical insurance.

 Maternity insurance

These policies cover medical bills of pregnant women during pre-natal, post-natal and delivery stages of pregnancy. It provides coverage for both the mother and her newborn.

Personal Accident Insurance 

This is a health insurance policy that only offers coverage against financial liability from injuries, disability or death arising due to accidents.

Benefits of Health types of Insurance

There are several benefits with buying medical insurance policy, some of these benefits includes but not limited to;

Critical illness cover: the policy offers protection or insurance coverage for critical illnesses.

Helps to ameliorate the high cost of medical care: the insurance policy pays for the type of medical coverage it insures.

Easy cashless claims: as a result of the fact that almost all medical insurance providers are connected to huge network of hospitals and other health care providers, the process of receiving emergency medical care  is made very smooth and easy. The policyholder is not required by the hospitals linked with the insurer to pay a dime before receiving medical attention with respect to covered treatments.

Peace of mind: having a medical insurance policy affords the policyholder maximum peace of mind knowing full well that he will not pay out of his pocket in the time of medical care.

MOBILE INSURANCE AS TYPE OF INSURANCE

This is the type of insurance policy that covers our mobile phones against damages, theft and others. These days, owing to the rising price of mobile phones and their several applications today, it has become imperative to insure the device. This policy allows the policyholder to reclaim money that you spend on repairing your phone in the event of accidental damage.

Benefits of phone insurance

It provides Comprehensive protection for new devices

Provides Coverage against Damage to Screen

Coverage against Theft or Robbery of Smart phones

CYCLE INSURANCE AS TYPE OF INSURANCE

Bicycles are valuable properties in almost all parts of the world as some people rely on them for their daily movements. A cycle insurance policy ensures that you have access to necessary funds should your bicycle undergo accidental damage or theft. It saves the policyholder out of pocket expenses.

Benefits of Cycle Insurance

Cycle insurance policies provide financial assistance not minding where your bicycle sustains damage.

It also offers Protection against Fires and Riots

Coverage for Accidental Death due to bicycle accident. Here the insurance policy for the cycle would offer a lump-sum payout to your surviving family members or dependents.