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What is insurance? What are the types of insurances?
Posted on: 27/Feb/2017 4:21:00 PM
Insurance
Lives are full of wonders. Any incident that occurs in life may throw the life-cycle out of gear completely. Hence, it is hugely advisable for the human to be always prepared for these unexpected negative happenings in their lives.
The process of taking insurance is one such important steps to offset any calamitous incidents encountered in life.
Types of insurance
Generally, there are 5 types of insurance.
Term Insurance
Imagine a young couple with young children. What happens if the breadwinner of the family dies? It is very likely that the properties left behind and the other facilities may not just be enough to take care of the family`s future. So, the life of the bereft family becomes a huge question.
In this instance, insurance provides a great relief to the family. To get the insurance coverage, an individual has to pay a certain annual premium.
In the case of any untoward incident happening when the insured individual dies, the entire insured amount will be paid to the family of the bereaved person.
This is the simplest type of insurance plan and known as term insurance.
Money-back
The insurance company may quite often increase the annual premium and invest this in various spheres of industry on behalf of the insurer. After deducting the expenses for the investment, the balance amount will be paid at fixed intervals known as money-back or the whole amount as a term plan.
The insurance companies generally follow the procedure of offering a minimum guarantee on these investments. The money-back is decided by the expenses incurred by the insurance company on the investment and other charges.
ULIP
In case the balance amount is invested by the insurance company in mutual fund schemes., this insurance is known as ULIP insurance plan. However, there is no guarantee regarding the amount paid by the insurance company in this coverage. The payments are simply decided by the share market situation. So this type of insurance coverage is linked to the share market.
Generally, this type of insurance policy is taken from the most important person in a company/organization in the case of the untimely death.
Mediclaim policy
The type of insurance which covers the medical expenses incurred by an individual and his/her family is called mediclaim policy. In case the insured person needs a medical treatment due to accident or gets seriously sick and is admitted in the hospital, the mediclaim policy pays back these incurred medical expenses. However, this policy is valid only if the treatment is taken in hospitals located in India.
This is handy if the individual is affected by any serious kind of illness/disease. For example, if the person is treated for paralytic stroke, organ failure, and cancer, mediclaim takes care of the related expenses.
In this case, the amount paid as the premium will be paid back irrespective of the medical expenses incurred. However, in this type of insurance coverage, the policy is taken to cover only certain dangerous diseases which can debilitate the affected and insurance-covered individual.
The interest earned by this investment could be very handy for future. This coverage pays a daily amount for the number of days in the hospital. This amount does not relate to the medical expenses incurred. This covers the related expenses such as transport, medical attendant/assistant, and the loss of the monthly salary. Generally, these are not covered in the normal mediclaim policy.
This scheme comes to help when the individual undertakes a foreign trip and suddenly needs unexpected medical attention/treatment. This policy covers other events likes loss of passport or personal belongings, the treatment for the close relatives, or the cancellation of the journey due to a sudden illness.
Car insurance
This policy is required to cover the risks of expenses incurred by you for the others who may be affected due to some car accident. This is known as 3rd Party Car Insurance.
This car insurance policy is essential even as start taking your car out.
A general car insurance policy covers the damages to the car in the event of an accident, the damages caused to the person, any losses incurred due to robbery. It also enables to exchange with a new car due to the losses incurred by the vehicle driver and the co-passengers.
Property insurance
This insurance covers the losses incurred in the event of any natural calamities such as fire. Floods, or lightning which may cause damage to your house, other properties, and belongings including consumer appliances. This covers the losses incurred due to robbery, stealing, high/low voltage affecting the electrically operated consumer durables.
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