Different Types of Insurance Policies

Different Types of Insurance Policies can be divided into the following categories based on their subject matter or the nature and risk of the covered risks:

1. Life Insurance
2. Fire Insurance
3. Marine Insurance
4. Other Types of Insurance

Let’s talk briefly about each type of insurance.

Life Insurance

Human beings may be exposed to different risks.

• A person could be at risk of dying untimely due to an accident or a disease and parents of the deceased may face financial problems in such an instance, or It may be possible not to have sufficient money as you age in order to live comfortably.

Or, you may still need to have a lot of money for certain situations, like children’s marriage or higher education.

Now, this insurance contract protects us from such conditions.

The agreement states that the insurer will pay an agreed amount either at the time of the insured’s death or after a specified period.

This premium is paid either as a lump sum or in monthly installments by the insured.

The term Life Insurance contract is also known as Life Assurance because the insured’s risk is inevitable, and the sum assured will be paid sooner or later.

The life insurance policy was designed to help you protect yourself against the unpredictability of life.

Slowly, however, its coverage has expanded to include other areas such as:

• Health Insurance,
• Disability Insurance, and
• Pension Plans.

There are two types of basic life insurance policies as of Different Types of Insurance Policies:

1. Whole-Life Policy,
2. Endowment Policy.

The premium for Whole-Life Policies is either payable regularly throughout the insured’s lifetime or for a set period.

After the insured’s death, the sum assured is payable to their heirs.

Individuals who wish to provide financial support after their death can purchase these policies.

On the other hand, an endowment policy is only valid for a set period and covers the insured up to a certain age.

If it happened earlier, the sum assured becomes due at the end of that period or the insured’s death.

This type of insurance is the most common.

Insurance companies offer many additional policies to draw customers in addition to the ones mentioned above.

Let’s look at some of these policies.

Joint Life Policy

This policy can be used for two or more people and on the death of any dependent, the assured amount will be payable.

This policy can be taken out by either a husband and wife or two partners.

Money Back Policy

This plan provides periodic payments to policyholders, which is unlike traditional endowment plans that only pay the death benefits at maturity.

For example,

In the 20-year Money Back policy, 20% of the sum assured is payable after five, ten, or fifteen years and the remainder, 40% plus the bonus, are payable after the 20th year.

Pension Plan

This plan provides that the assured sum will be paid to the policyholder before death on their life beyond the policy’s term.

The policy money, is also known as the sum assured, payable in monthly, quarterly, semi-yearly, or annual installments.

This policy is helpful for people who want regular income after a specific age.

Unit Plans

These plans provide both insurance and investment protection.

The policyholder pays a premium which is used to buy shares or debentures from different companies.

The market value of the investment is the primary determinant of the maturity amount.

Group Insurance Scheme

These insurance plans offer low-cost life insurance protection to a small group and these plans are ideal for employees in any type of office or business.

Fire Insurance

The contract for fire insurance involves the insurer taking into account the premium and becoming responsible for compensating the insured in the event of loss or damage caused by fire.

The premium is due in one installment in Fire Insurance.

Fire insurance contracts are usually committed for one year. After one year, the policy automatically expires.

It is possible to renew your policy by paying the premium in total each year.

There are two conditions required to be eligible for a claim for fire damage:

• There must be actual fire,
• The fire must be accidental and not intentional.

An indemnity contract is a contract for fire insurance.

The insured can only claim the amount of property that was destroyed or lost by fire or the contract price.

It may be mentioned that any loss or damage from a fire can also include the efforts to extinguish the flames to minimize the loss.

Marine Insurance

This is an insurance contract that covers the shipping company for any marine adventure risks and a ship can be exposed to many dangers on its journey, including collisions with other ships, hidden rocks, fire or storm, and other vessels.

In all of these cases, the total loss can be classified into three sections:

• Loss to a ship,
• Loss to cargo, and
• Loss to shipment.

Cargo Insurance is also known as Marine Insurance that covers cargo loss.

It is also known as Ship Insurance when it protects the shipowner against the dangers of the ocean.

Once the cargo has been securely delivered to its destination, its owner is responsible for the freight.

The shipping company might also be eligible for insurance to cover the freight loss risk.

Freight insurance coverage is a type of marine insurance.

Other Types of Insurance

General insurance companies provide Different Types of Insurance Policies protection against various risks, besides Fire, Life, and Marine insurance.

There are some of these policies and risks explained below:

Motor Vehicles Insurance

Passenger cars, vans, commercial vehicles, motorcycles, scooters, and motorbikes all require insurance to protect against the possibility of damage or loss of the vehicle due to theft, accident, or other causes.

They also cover liability for injuries or deaths of third parties and vehicle insurance is mandatory for third-party injuries.

Health Insurance

It covers medical expenses related to treatment for illness or injury.

This insurance is often called medical-claim insurance. It is the most widely used type of insurance today.

Crop Insurance

It protects farmers against crop loss in the event of flood or drought.

Cash Insurance

It protects banks, businesses, and other establishments from money-loss in transit.

Cattle Insurance

It covers any loss resulting from the death of a bull, cow, buffalo, heifer, or bull due to accidents, diseases, or other factors.

Rajeswari Mahila Kalyan Bima Yojana

It provides financial support to her family in the event of her disability or death.

Amartya Siksha Yojana Insurance Policy

This policy covers the dependent children’s education.

If the insured parent sustains a bodily injury that results in death or permanent disability, the insurer will pay for the education of their dependent children.

Burglary Insurance

The insurance company agrees that the insured is covered against property loss or theft under this insurance policy.

Fidelity Guarantee Insurance

To protect themselves against the possibility of losing money due to theft, cash defalcation, or misappropriation of goods from employees.

Business people might consider purchasing insurance coverage for fraud and employees dishonesty managing money or being in charge.

It is also called fidelity assurance insurance.