What Are The Different Types Of Insurance Available? Why Should You Get One?

Work desk with stationeries and types of insurance policy

Insurance Benefits Protection Risk Security Service Concept

Are all things going as per your plans for the day? Right from receiving a consignment on time to timely unloading, loading in another vehicle, and despatching the same, were you able to do everything that you wanted to? Probably not. 

It is not surprising that life always throws surprises at us. Our lives are filled with many experiences we may have anticipated, but the majority come to us unexpectedly. Your vehicle out for delivering the same consignment can meet with an accident, lose its way, or get attacked by a mob of thieves; the risk factors are many. And when life brings us face to face with such an unpleasant situation, it is an insurance policy that safeguards us during our difficult times. 

What is an insurance policy? 

Insurance is a legal agreement between two parties, namely the insurer company and the insured individual. As per the types of insurance policy, the company covers the loss incurred by the individual in the face of damage/loss to the insured property. The insured person needs to pay a certain amount regularly as a premium to the company in exchange for the safety offered. 

Let’s illustrate this through an example of the farsighted Mr. Mehra who likes to plan everything in advance. So, it was obvious for him to get his fleet of trucks insured even though it meant paying Rs. 9800 every month as a premium. When one of his trucks out for delivery suddenly caught fire on a highway, what saved him from being devastated was the insurance policy that assured him of financial aid.

Similarly, when the next time an unexpected downpour damages your goods, you will have the financial backup offered by your insurance company, if you choose to have it insured.

What is a deductible? 

While claiming insurance, you might find the premium to be lesser than it ought to be. Hence, you need to pay the balance amount to be able to claim your insurance money. This extra payable amount is known as the deductible. You can opt to pay lesser premiums with more deductibles if agreed to by your insurance company. 

What are the different types of insurance policies?

There are various types of insurance policies available in India that you can opt for, depending on your requirement. These can be broadly divided into two categories– Life insurance, and General Insurance. General insurance, again, can be subdivided into multiple categories. The details of the same are as follows:

  1. Life insurance Policy

Out of all the types of insurance in India, the most common and widely known is life insurance. As the name indicates, life insurance arranges for monetary compensation to the policyholder in case of their untimely death. A life insurance policy is meant to support those dependent on the policyholder so that they have financial security in his/her absence. 

For example, when Mr. Sharma, a truck driver out to deliver goods, met with a fatal road accident, his family members had the security of his life insurance policy. Hence, even in the absence of their breadwinner, they did have financial support to help them during the tough times.

Term insurance versus life insurance

Term insurance is when the premium is paid for a pre-specified term. In case of an untimely death of the policyholder during the term period, the insurance money is paid to the family. The same amount remains with the insurance company in case the policyholder survives the term period. Life insurance, on the other hand, pays the insurance money at the time of maturity irrespective of the policyholder’s life status. 

  1. General insurance policy

As is evident, General insurance policies are non-life insurance policies, such as:

  1. Motor/automobile/Commercial Vehicle Insurance

Commercial vehicle insurance offers security when the insured vehicle suffers damage/destruction/loss. As per a statistical study, the year 2020 saw the loss of 1.3 lakh lives in road accidents, while 3.4 lakhs people suffered injuries. This data clearly depicts the importance of vehicle insurance.

Insurance can provide financial aid and security in the event of an accident. There are many types of insurance for vehicles, such as–

Car insurance: For private/domestic cars/four-wheelers

Commercial vehicle insurance: For any vehicle used for commercial purposes. These types of insurance plans can be used for trucks, lorries, heavy vehicles, four-wheelers, and two-wheelers alike if they are used for business.

Two-wheeler insurance: For any privately owned two-wheeler like a bike or scooter.

For example, a delivery guy can get his two-wheeler insured against theft, accidents, and any kind of damage to the vehicle. 

  1. Health Insurance

A health insurance policy is usually bought to cover the expenses of medical treatments. There are different types of insurance policies for health– they can be either general health insurance policies or specific to certain diseases and ailments. Depending on the type of insurance plan you choose, your expenditure for treatment, hospitalization, and medications can be covered. 

  1. Education Insurance 

An education insurance policy is a kind of fund-saving policy wherein you regularly pay the premium to get a lump sum at the end of maturity which is usually when the child is ready to pursue higher education. In the case of education insurance, the policy bears the expenses of the child’s education. 

  1. Property Insurance

You can opt for this type of insurance to receive financial assistance in case of any damage caused to the insured property or structure. Property insurance can be taken for shops, homes, buildings, or offices. Depending on the type of insurance in India, these properties can be insured against theft, fire, natural calamities, etc. For example, a factory owner can get property insurance for his factory. 

  1. Travel Insurance

This one is for frequent fliers or for people who take international trips more often. These insurance policies can cover baggage loss, flight cancellations, and delays. Hence, a person who is relocating to another city can get his entire travel insured which would also cover damage to his baggage. 

Why Do You Need An Insurance Policy?

Having considered the types of insurance, we can now move on to understand the importance of getting an insurance policy. Who needs an insurance policy? Why should you take one? What are the benefits of an insurance policy? 

The advantages of having an insurance policy are multifarious. Here’s a list of a few of them:

  1. An insurance policy covers the damages caused to the insured. In case of unavoidable circumstances, your home/health/vehicle can be at risk of facing danger. An insurance policy makes sure that your future is secured with the financial help offered by the insurance company.
  2. Take care of third-party liabilities with different types of insurance for vehicles. In case of a mishap, any loss or damage caused to a third party is taken care of. 
  3. Comprehensive coverage allows for maximum benefits even in the face of losses. For example, commercial vehicle insurance can help with the expenses of repair. Accidents, mishaps, natural calamities, fire, and theft, are some of the circumstances that are insured against. 
  4.  In addition to the safety benefits, insurance policies also provide tax benefits to the insurance policyholders. At the time of filing your income tax returns, you can claim these tax benefits if you pay the premium for your insurance policy. 

With this basic understanding of the types of insurance, you are now better equipped to opt for a plan that suits you the best. Identify your needs, look at the types of insurance in India and invest accordingly. To help you get started on getting insurance, you can reach out to Vahak. All your queries will be duly answered along with friendly assistance and guidance.

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