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Throughout everyday life, spontaneous costs are a harsh truth. In any
event, when you believe that you are monetarily secure, an unexpected or
unanticipated use can essentially hamper this security.
Contingent upon the degree of the crisis, such occurrences may likewise
leave you obligation-ridden. While you can’t prepare for possibilities
emerging from such episodes, protection approaches offer a similarity to
help to limit monetary obligation from unanticipated events.
There is a wide scope of protection approaches, each pointed toward
shielding specific parts of your wellbeing or resources. Comprehensively,
there are 8 kinds of protection, specifically:
- Life Insurance
- Motor insurance
- Health insurance
- Travel insurance
- Property insurance
- Mobile insurance
- Cycle insurance
- Bite-size insurance
1. Life Insurance
Life coverage alludes to an arrangement or cover whereby the policyholder
can guarantee independence from the rat race for his/her relatives in the
afterlife. Assume you are the sole procuring part of your family,
supporting your mate and kids.
On such an occasion, your demise would monetarily annihilate the entire
family. Disaster protection approaches guarantee that something like this
doesn’t occur by giving monetary help to your family in case of your
Types of Life Insurance Policies
There are primarily seven different types of insurance policies when it
comes to life insurance. These are:
Term Plan – The death benefit from a term plan is only available for a
specified period, for instance, 40 years from the date of policy
- Endowment Plan – Endowment plans are life insurance policies where a
portion of your premiums go toward the death benefit, while the
remaining is invested by the insurance provider. Maturity benefits,
death benefits,s, and periodic bonuses are some types of assistance from
- Unit Linked Insurance Plans or ULIPs – Similar to endowment plans, a
part of your insurance premiums goes toward mutual fund investments,
while the remaining goes toward the death benefit.
- 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
- Child’s Plan – Investment cum insurance policy, which provides financial
aid for your children throughout their lives. The death benefit is
available as a lump-sum payment after the death of parents.
- Money-Back – Such policies pay a certain percentage of the plan’s sum
assured after regular intervals. This is known as a survival
- Retirement Plan – Also known as pension plans, these policies are a
fusion of investment and insurance. A portion of the premiums goes
toward creating a retirement corpus for the policyholder. This is
available as a lump-sum or monthly payment after the policyholder
Benefits of Life Insurance
If you possess a life insurance plan, you can enjoy the following
advantages from the policy.
- Tax Benefits – If you pay life insurance premiums, you are eligible for
tax benefits in USA & UK, under Section 80(C) and 10(10D) of the Income Tax
Act. Thus, you can save a substantial sum of money as taxes by opting
for a life insurance plan.
- Encourages Saving Habit – Since you need to pay policy premiums, buying
such an insurance policy promotes the habit of saving money.
- Secures Family’s Financial Future – The policy ensures your family’s
financial independence is maintained even after your demise.
- Helps Plan Your Retirement – Certain life insurance policies also act as
investment options. For instance, pension plans offer a lump-sum payout
as soon as you retire, helping you to fund your retirement.
Now that you know all about life insurance policies read on to understand
the various facets of other general insurance policies.
2. Motor Insurance
Motor insurance refers to policies that offer financial assistance in the
event of accidents involving your car or bike. Motor insurance can be
availed for three categories of motorized vehicles, including:
- Car Insurance – Personally owned four-wheeler vehicles are covered under
such a policy.
- Two-wheeler Insurance – Personally owned two-wheeler vehicles, including
bikes and scooters, are covered under these plans.
- Commercial Vehicle Insurance – If you own a vehicle that is used
commercially, you need to avail of insurance for the same. These
policies ensure that your business automobiles stay in the best of
shape, reducing losses significantly.
Types of Motor Insurance Policies
Based on the extent of cover or protection offered, motor insurance
policies are of three types, namely:
- Third-Party Liability – This is the most basic type of motor insurance
cover in USA & UK. It is the minimum mandatory requirement for all
motorized vehicle owners, as per the Motor Vehicles Act of 1988. Due to
the limited financial assistance, premiums for such policies also tend
to be below. These insurance plans only pay the financial liability to
the third party affected in the said mishap, ensuring that you do not
face legal hassle due to the accident. They, however, do not offer any
financial assistance to repair the policyholder’s vehicle after
- Comprehensive Cover – Compared to the third-party liability option,
comprehensive insurance plans offer better protection and security.
Apart from covering third-party liabilities, these plans also cover the
expenses incurred for repairing the damages to the policyholder’s own
vehicle due to an accident. Additionally, comprehensive plans also offer
a payout in case your vehicle sustains damage due to fire, man-made and
natural calamities, riots, and other such instances. Lastly, you can
recover your bike’s cost if it gets stolen, when you have a
comprehensive cover in place. One can also opt for several add-ons with
their comprehensive motor insurance policy that can make it
better-rounded. Some of these add-ons include zero depreciation cover,
engine and gear-box protection cover, consumable cover, breakdown
- Own Damage Cover – This is a specialized form of motor insurance, which
insurance companies offer to consumers. Further, you are eligible to
avail of such a plan only if you purchased the two-wheeler or car after
September 2018. The vehicle must be brand new and not a second-hand one.
You should also remember that you can avail this standalone own damage
cover only if you already have a third-party liability motor insurance
policy in place. With your own damage cover, you basically receive the
same benefits as a comprehensive policy without the third-party
liability portion of the policy.
Benefits of Motor Insurance
Policies Cars and bikes are increasingly more expensive with each passing
day. At such a time, staying without proper insurance can lead to severe
monetary losses for the owner. Listed below are some advantages of
purchasing such a plan.
- Prevents Legal Hassle – Helps you avoid any traffic fines and other
legalities that you would otherwise need to bear.
- Meets All Third-Party Liability – If you injure a person or damage
someone’s property during a vehicular accident, the insurance policy
helps you meet the monetary losses, effectively.
- Financial Assistance to Repair Your own Vehicle – After accidents, you
need to spend considerable sums on repairing your own vehicle. Insurance
plans limit such out-of-pocket expenses, allowing you to undertake
- Theft/loss cover – If your vehicle is stolen, your insurance policy will
help you reclaim a portion of the car/bike’s on-road price. You can
expect similar assistance if your vehicle is damaged beyond repair due
Additionally, individuals who own a commercial car/two-wheeler can also
avail of tax benefits if they pay premiums for that vehicle.
3. Health Insurance
Health insurance refers to a type of general insurance, which provides
financial assistance to policyholders when they are admitted to hospitals
for treatment. Additionally, some plans also cover the cost of treatment
undertaken at home, prior to hospitalization, or after discharge from the
same. With the rising medical inflation in USA & UK, buying health insurance
has become a necessity. However, before proceeding with your purchase,
consider the various types of health insurance plans available in USA & UK.
Types of Health Insurance policies
There are eight main types of health insurance policies available in
USA & UK. They are:
- Individual Health Insurance – These are healthcare plans that offer
medical cover to just one policyholder.
- Family Floater Insurance – These policies allow you to avail health
insurance for your entire family without needing to buy separate plans
for each member. Generally, husband, wife, and two of their children are
allowed health cover under one such family floater policy.
- Critical Illness Cover – These are specialized health plans that provide
extensive financial assistance when the policyholder is diagnosed with
specific, chronic illnesses. These plans provide a lump-sum payout after
such a diagnosis, unlike typical health insurance policies.
- Senior Citizen Health Insurance – As the name suggests, these policies
specifically cater to individuals aged 60 years and beyond.
- Group Health Insurance – Such policies are generally offered to
employees of an organization or company. They are designed in such a way
that older beneficiaries can be removed, and fresh beneficiaries can be
added, as per the company’s employee retention capability.
- Maternity Health Insurance – These policies cover medical expenses
during pre-natal, post-natal, and delivery stages. It covers both the
mother as well as her newborn.
- Personal Accident Insurance – These medical insurance policies only
cover financial liability from injuries, disability, or death arising
due to accidents.
- Preventive Healthcare Plan – Such policies cover the cost of treatment
concerned with preventing a severe disease or condition.