4 Different Types of General Insurance in India

 

4 Different Types of General Insurance in India

General insurance covers home, your travel, vehicle, and health (non-life assets) from fire, floods, accidents, man-made disasters, and theft. Different types of general insurance include motor insurance, health insurance, travel insurance, and home insurance. A general insurance policy pays for the losses that are incurred by the insured during the period of the policy.

Different Types of General Insurance

Today it is crucial to know about the different types of general insurance because of the numerous benefits they offer. Read on to know more about them:

1. Home Insurance

As the home is a valuable possession, it is important to secure your home with a proper home insurance policy. Home and household insurance safeguard your house and the items in it. A home insurance policy essentially covers man-made and natural circumstances that may result in damage or loss.

2. Motor Insurance

Motor insurance provides coverage for your vehicle against damage, accidents, vandalism, theft, etc. It comes in two forms, third-party and comprehensive.

When your vehicle is responsible for an accident, third-party insurance takes care of the harm caused to a third-party. However, you must take into account one fact that it does not cover any of your vehicle’s damages. It is also important to note that third-party motor insurance is mandatory as per the Motor Vehicles Act, 1988.

A comprehensive insurance policy safeguards your vehicle against fire, earthquake, theft, impact damage, etc. Additionally, it provides coverage against any third-party liability in the case of third-party property damage, bodily injury, or death.

3. Travel Insurance

When you are travel internationally and suffer losses because of loss of baggage, trip cancellation, or delay in flight, a travel insurance policy safeguards you. You may also be offered cashless hospitalization if you are hospitalized while travelling.

4. Health Insurance

Health insurance is a vital tool for risk mitigation and helps you deal with medical emergencies. A health insurance plan covers hospitalization expenses up to the sum insured. When it comes to health insurance, one can opt for a standalone health policy or a family floater plan that offers coverage for all family members.

Difference between General Insurance & Life Insurance

Life insurance provides coverage for your life. If a situation occurs wherein the policyholder has a premature death within the term of the policy, then the nominee gets the sum assured by the insurance company. It is one of the most important financial instruments. Life insurance is different from general insurance on various parameters:

·         General insurance policy is a short-term contract whereas life insurance is a long-term contract.

·         In the case of life insurance, the benefits and the sum assured is paid on the maturity of the policy or in the event of the policy holder’s death. On the other hand, in the case of general insurance, the claim or the actual loss amount is reimbursed when a specific event occurs.

·         Because the contract of life insurance is long-term in nature, the premium is paid all through the term of the policy or until the minimum premium paying term. As far as the premium of general insurance is concerned, the premium is paid if the policy is renewed in the next year.

Mandatory General Insurance a User Should Have

Health insurance is a must-have cover, given the ever-increasing healthcare charges, while travel and home insurance can help save you from a lot of grief. They are however not mandatory to have. The general insurance cover that is mandatory is third-party liability car insurance. This is the minimum coverage that a vehicle should have before they can ply on Indian roads.

Each and every type of general insurance cover comes with an aim, to offer coverage for a particular aspect. So, if you have not yet availed general insurance covers, then make sure you recognise your needs and buy the ones you require as soon as possible.


General Insurance

While life insurance covers the life of a person, general insurance provides cover to other aspects and assets in a person’s life, for example, health, car, travel, home, etc. This type of cover insures assets against theft or damage due to fires, natural calamities, accidents, man-made disasters like riots or terrorist attacks, etc. While life insurance policies provide cover against the risk of life, general insurance provides cover against other types of risks that may affect a person’s health or some of his/her physical assets like a home or a vehicle etc.

Types of General Insurance

  • Health Insurance: This is one of the most common types of general insurance and provides cover against medical emergencies and hospitalisation expenses. A person can choose between specific plans for certain types of ailments, like heart and cancer ailments, accidents, etc. There are different types of health insurance plans available in the market today. One can choose an individual cover or opt for a family cover for all the family members
  • Home Insurance: Just like insuring health, one can also insure his/her house for a certain sum of money. Home insurance provides security against natural calamities like earthquakes, floods, riots, theft, etc., that can damage one’s home or its belongings. If a person suffers any loss due to any of these reasons, he/she can submit a claim to the insurance provider. After carefully assessing the extent of the damage, the insurance company will pay the insurance claim
  • Travel Insurance: Travel insurance is specific to a trip and a person can get the insurance right before he/she starts the journey. This type of insurance provides security against the loss of baggage, delay or cancellation of flights, accidents or hospitalisation expenses, etc, during a trip. If a person meets with an unfortunate accident, or loses his/her baggage, he/she can claim travel insurance to cover these expenses
  • Motor Insurance: Motor insurance secures vehicles and provides cover against damage due to accidents, theft, riots, terrorist attacks, or natural calamities like floods, cyclones, etc. Motor insurance is of two types:
    • Comprehensive Insurance: This includes a broader spectrum of things. Comprehensive motor insurance covers both the parties involved in an accident. It also provides cover against theft or damage due to factors like natural calamities, human-made disasters like riots, vandalism, and more
    • Third-Party Insurance: This only provides cover to the third party involved in an accident. This type of insurance usually has a lower premium than comprehensive insurance

Now that you know the meaning and types of life and general insurance; let’s move on to some major differences between the two.

Key differences between General and Life Insurance

  • Term of contract

    One major distinction between the two is the duration of the policy. Life insurance plans are long term plans and require policyholders to either pay a lump sum premium, or regular monthly, quarterly, or yearly premiums for a significant amount of time. For example, 15-20 years or up to a lifetime.

    General insurance, on the other hand, is a short term plan that is generally renewed yearly.

  • Premium payment

    The premium for a life insurance policy is paid at regular intervals like monthly, quarterly, or yearly. In contrast,the premium for a general insurance policy is paid at once, either when the policy is bought or when it is renewed. This may differ in case of a travel insurance plan, where a person pays premium only while buying insurance for a specific trip.

  • Insurance Claim

    In case of a life insurance policy, the sum assured is paid to the nominee during the policy term in the event of the policyholder’s death. The sum assured can also be returned to the policyholder on maturity. In the case of endowment and money back plans, the insurance provider also pays back the interest earned on investments. Another important thing to note is that in case of a critical illness, the policyholder can claim life insurance benefits upon diagnosis of the disease or health condition covered under the policy.

    The insurance claim of a general insurance can depend on some specific events. For example, general health insurance can only be claimed after hospitalisation, in case of a medical emergency or ailment diagnosis. In the same manner home, motor, or travel insurance can be claimed only if there has been any loss or damage to an asset due to an unfavourable event like a robbery, accident, or any such event.

  • Policy Value

    The policy value for a life insurance plan depends on the preference of the policyholder. One can fix the sum assured depending on the requirements of his/her family and the ability to pay premiums. The sum assured is then paid back to the policyholder on maturity or to the nominee in case of an unfortunate event.

    As opposed to life insurance, the policy value of general insurance is influenced by the value of the asset. The policy value, in this case, is based on the damage suffered and not on the sum assured.




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