Insurance is a legal agreement between two parties i.e. the insurance company (insurer) and the individual (insured). In this, the insurance company promises to make good the losses of the insured on happening of the insured contingency. The contingency is the event which causes a loss. It can be the death of the policyholder or damage/destruction of the property. It’s called a contingency because there’s an uncertainty regarding happening of the event. The insured pays a premium in return for the promise made by the insurer.
Types of Insurance
|Unit-Linked Insurance Plan
As the name suggests, life insurance is insurance on your life. You buy life insurance to make sure your dependents are financially secured in the event of your untimely demise. Life insurance is particularly important if you are the sole breadwinner for your family or if your family is heavily reliant on your income. Under life insurance, the policyholder’s family is financially compensated in case the policyholder expires during the term of the policy.
Types of Life Insurance Policies
Insurance agreements that do not come under the ambit of life insurance are called general insurance. Following are the main different types of General Insurances in India:
The Health Insurance cover offers protection for the medical expenses incurred due to hospitalization caused because of an accident or illnesses. Though every policy is different, based on who it's being obtained for, it largely covers:
The premium for the health insurance is charged on the basis of:
A Motor Insurance Policy is mandatory to be able to drive legally in India. Broadly there are two types:
A Third-Party Policy covers for losses faced in a situation where your vehicle damages any third-party such as a public property, person or third-party vehicle. The same is the minimum requirement to be able to drive legally in India, as stated by the Motor Vehicles Act.
A Comprehensive Package Policy covers both third-party damages and liabilities and damages/losses caused to you and your own vehicle. The losses may arise due to an accident, theft, fire, natural calamities, and others.