The Top 4 Insurance Policies Everyone Should Have in India

Let us begin with two well-known INSURANCE quotes:

“You don’t buy life insurance because you are going to die, but because those you care will be able to live financial independent.”

“I don’t call it Life Insurance, I call it Love Insurance. We buy it because we want to leave a legacy for those we love.”

What is Insurance in general?

And why Insurance only? Is it really important?

Here are a handful of the questions that are on everyone’s mind. Lets us explore each one of them and other such questions in detail and with the wider prospects.

Insurance Status in India!

Insurance isn’t taken seriously in India. As a matter of fact, it isn’t even thought to be vital to cope with any crisis. According to a study, more than 60% of the population is still not covered by any insurance policy. This equates to over 700 million individuals.

Those who work in the good commercial sector or for the government can benefit from a variety of Insurance Scheme, while the remainder pays for their own care. Many businessmen and company owners are still unaware of the value of Asset Insurance. In fact, only a small fraction of Indian businessmen would have purchased Health or Term Insurance.

Even the Indian Government has taken no significant efforts to ensure that all its citizens are covered (as a compulsion) under major life’s calamities. Except for launching 2-3 schemes, like the poor people’s programme, which is Pradhan Mantri Suraksha Bema Yojana (PMSBY). In this package, benefits are very low with a slim chance of surviving even a year.

Is Insurance Important?

We Indians have a tendency to feel that bank savings are enough to be financially secure. But these savings aren’t enough to achieve all sorts of financial independence. We must also need to protect other vital possessions with general insurance plans.

Just consider a scenario in which you are forced to wipe out all your income for which you’ve worked your whole life in order to pay for emergency medical bills or an automobile that is damaged and beyond maintenance. Here, Insurance plays an important Part! If you have bought Health Insurance, it is very much easier to handle your financial condition.


Here are four more important reasons why you should get insurance.

1.) Mindfulness – or in other words peace of mind. There is no amount of capital that can compensate for your peace of mind. As a result, having insurance ensures that you are protected against any unanticipated life occurrences, giving you total peace of mind.

2.) Financial Security and Stability – As previously said, an unforeseen occurrence may devastate your financial situation in an instant. As a result, insuring yourself, your family, and your possessions is the greatest approach to become financially secure.

3.) Risk Segregation or Transfer of Risk – Having insurance relieves you of the financial strain. All the risk of your life or asset is transferred to the insurer or the company you signed your policy agreement with. But it is mandatory to pay premiums timely to receive compensation from the insurer.

4.) Guarantee of Protection – It is critical to have a guarantee of protection during a crisis. In this case, the insurer has a role to play. They promise to assist you in any difficult scenario that arises in your life. And they don’t deceive by taking their hands back.


Types of Insurance

There are two major types of Insurance: General Insurance and Life Insurance

A contract between a policyholder and an insurance company in which the beneficiary is named to receive certain monetary benefits in the event of the insured person’s death is called Life Insurance.

Whereas, General insurance covers hazards that aren’t concerned with your life or death. It might protect your health, your automobile, your home, your belongings, and other assets from accidents and calamities. These policies provide us with more financial security, which is something we have been ignoring for a long time.


Let us go through these insurance products in more detail. Below are the Top 4 Insurance Policies Everyone Must Have in India.

1.) Life Insurance

First on our list is life insurance. So what actually is life Insurance? In most simple terms, Life Insurance is to secure the future of your family. In technical terms, it is a contract between an individual (policyholder) and an insurance company (insurer) in which the insurer agrees to pay an amount of money in return for a premium if the covered person dies or after a certain length of time.

There are 7 different kinds of life insurance plans that are available on the market today and you can buy any one of these to help ensure the future of those you care about. They are:

  1. The Term Insurance – is a form of life insurance that provides coverage for a certain period of time. If the policyholder dies within this time, the death benefit will be paid to the policy’s nominee. If the policyholder lives to the end of the policy term, no benefit will be given.
  2. The Money Back Policy – is the ideal insurance policy for people who wish to have some liquidity with their funds. In this, the policyholder receives a predetermined amount of money at regular intervals over a period of a few years.
  3. ULIP (Unit Linked Insurance Plans) – is a form of life insurance that provides both life insurance and market-linked profits on your investment. In this plan, there is no security of your funds or guarantee of any fixed amount of income at the end of the policy term.
  4. An Endowment Plan – is a type of life insurance policy that has both an insurance and a savings component. It has a shorter covering span and typically matures in 10 to 20 years.
  5. Whole Life Insurance Plan – are meant to continue for the rest of the insured’s life, thus they mature when the policyholder reaches 95 or 100 years old.
  6. Child Insurance Plan – combines insurance and investment to protect your child’s future security. Even if you are not there, Child Insurance Plans ensure that your child’s future financial requirements are met.
  7. The Retirement Plan – entails ensuring a consistent flow of income after retiring. It includes investing for the future and depositing it especially for that purpose. Your retirement plan will be determined by your long-term objectives, income, and age. Identifying sources of income, calculating costs, creating a savings programme, and managing assets and risk are all part of retirement planning.

With the aid of this Infographic, you may have a better understanding (click to enlarge).

Now, you can easily select any insurance from the list above as soon as possible.


2.) Health Insurance

Health Insurance is the second most important insurance a person must have. Basically, it is a form of insurance that pays for any Hospital Bills incurred as a result of an illness or any injury. These expenditures include Post or Pre-Hospitalization Bills, Day-Care, Medication Bills, or any Medical Consultation Fees.

In India, there are 7 different types of health insurance policies. And these seven health policies can be further divided into two segments:

A) Indemnity Plan – only cover the costs of your hospitalization treatment up to the amount insured. This plan includes policies like:

  1. Individual Health Coverage – is meant for an individual only and includes inpatient pre or post hospitalisation expenses such as doctor’s fee, surgery expenses, nursing charges, ambulance charges, oxygen, anesthesia etc.
  2. Family Floater Coverage – With a Family Floater health insurance coverage, you may cover your entire family under one plan with same benefits as discussed for individuals plan.
  3. Senior Citizen Coverage – Senior Citizen Health Insurance Plan is a plan designed specially for people over the age of 60 with same benefits as discussed above.
  4. Group Mediclaim Insurance – the policy is designed for a group of employees working together in an organization or institution.
  5. Unit Linked Health Plans – in this a percentage of the premiums paid is invested in the stock market, and the insured receives health insurance coverage.

B) Fixed Benefits – On the other side, upon the identification of disease, the insured receives a lump sum payment.

  1. Critical Illness Plan – It pays a pre-determined sum toward treatment when an illness is detected, regardless of pre- or post-hospitalization expenditures. The primary ailments that are covered by the majority of critical illness plans are as: Organ Transplant, Stroke, Cancer, Aorta Graft Surgery, Multiple Sclerosis, Kidney Failure, Paralysis, Coronary Artery Bypass Surgery and Heart Attack.
  2. Personal Accident Plan – The owner or driver is covered under this policy in the event of an accident resulting in injury or death. In the event of death or loss of income (owing to permanent partial or whole disability) the insured or their family receives a lump sum payment.

You can better understand with the help of this Infographic (click to enlarge):


3.) Motor Insurance

Motor insurance is a type of auto insurance that is required for vehicles such as Cars, Trucks, Jeeps, Buses, Motorcycles, and Scooters. This policy protects the car owner against financial losses resulting from accidents or other types of damages.

Because it is bound by law, motor insurance is mandatory when buying a vehicle. Every motor vehicle traveling on Indian roads must have at least third-party motor insurance, according to the Motor Vehicle Act of 1988.

But sometimes most people forgot or ignore to pay the further premium after the first or second year of their motor insurance. This is a reason we have kept this insurance in the third number on this list. So that every Indian citizen must pay their motor premium on time.

There are 3 main types of Motor Insurance in India.

  1. Car Insurance – As said above, this insurance is mandatory while buying your new car. Road accidents, floods, fires, riots, earthquakes, hurricanes, terrorist attacks, theft, explosions, third-party claims, and other losses are all covered by car insurance.
  2. Two Wheelers Insurance – another common form of vehicle insurance in India is Two Wheelers Insurance. The Indian Motor Tariff is in charge of it. This insurance protects against both man-made and natural disasters.
  3. Commercial Vehicle Insurance – This kind of insurance protects any cars that aren’t utilized for personal reasons. This insurance covers buses, trucks, heavy commercial industrial vehicles, lightweight commercial vehicles, multi-utility vehicles, agricultural vehicles, ambulances, etc.

4.) Home or Property Insurance

Major hazards to your property, such as fire, theft, and certain weather damage, are covered by this property insurance. But you must include in your policy about other dangers like nuclear disasters, floods, earthquakes, boilers, etc, which are examples of specialist insurance. Confusing? let’s make it more clear by divided this insurance policy into 2 categories: Open Perils Policy and Named Perils Policy.

  1. Open Perils Policy – All sort of causes of loss (not explicitly excluded) in the policy are covered. That is; damage from earthquakes, floods, nuclear accidents, acts of terrorism, and battle/war are all common exclusions on open peril plans.
  2. Named Perils Policy – In order for insurance to be given, the real cause of loss must be specified in the policy. Fire, lightning, hurricane, explosions, and thievery are just a few of the more well-known listed dangers.

We hope now you are clear! So it’s a must-have insurance policy for each and every one of us as it protects your home and valuables from natural disasters and burglary.


Other Interesting facts about Insurance Sector in India:

  1. In the Indian market, there are 24 life insurance firms and 34 non-life insurance businesses competing on price and service to attract clients. And along with it are 2 separate reinsurance companies.
  2. LIC is among the top and most selling insurance company in India. Under the Life Assurance business, LIC alone generated a record first-year premium income of Rs. 56,406 crore which is 7.75 billion in US Dollars (in the Financial Year 2021).
  3. The insurance industry still has enormous potential in India. This statement can be used to compute that by the end of 2022, India’s insurance sector is anticipated to be worth 300 Billion US Dollars.

Conclusion:

We all require insurance, whether it is for our Vehicle, Life, Health, House, Disability, or even Dental. Let’s make sure that we do not ignore these four insurances. And make certain that we are financially covered in the event of a disaster.

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