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13 August 2020 | 7 min read

A Guide To Planning Your Insurance Journey

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‘Are you insured?’ – This question has the power to offend people even when casually asked. Mostly because many families in India buy insurance cover for each member without also understanding the product and its need, just to proudly say ‘Of course I’m insured, what kind of question is that?’ at a social gathering. 

The objective of buying insurance might differ from person to person. For some, the purpose is tax benefits, while investments for the others and an ancestral ritual that they are clueless about for the rest. Either way, having an insurance policy is not a must. So dig in. 

What Is Insurance?

Insurance is a financial protective shield that comes to your rescue during uncertain times. To simplify, insurance means safeguarding against a specific risk that you can be exposed to, in the coming years. Did you ask how? Well, it is executed through the transfer of risk from one person to a group of individuals. These groups of individuals are ready to assume (take) that risk for a price (the premium) paid by you. Moreover, when you confront the risk, the damage caused to you (and your family members), is paid back to you by the risk-taker (the insurance company) in the form of claims. So, by buying an Insurance policy, you are purchasing a protection shield for the risks you face. It enables you to live peacefully, without bothering much about the upcoming or unexpected disasters. 

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There are various types of insurance that you need to protect yourself and your belongings. (Living as well as non-loving) against one or more liabilities or threats. This simple guide will help you know about various types of insurance policies and facilitate you in finding yourself the most appropriate one. Let’s get started!

In India, insurance is broadly categorized into the following categories:

  • Life insurance
  • Motor insurance
  • Health insurance
  • Travel insurance
  • Property insurance
  • Mobile insurance

Life Insurance

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Life insurance covers the dependents in case of the policyholder’s premature death. In such cases, the insurance company pays a pre-approved sum of money to their beneficiaries. A few variants of life insurance are listed below:

Term Plan – The benefit of a term plan is only available for a specified period. This means that if your plan is for 45 years, it is valid only for that period from the date of policy purchase.

Endowment Plan – These are life insurance policies where a portion of your premiums goes toward the death benefit, while the insurance provider invests the remaining. Some types of assistance from endowment policies include maturity benefits, death benefit and periodic bonuses. 

Unit Linked Insurance Plans or ULIPs – Almost same as endowment plans, a Unit Linked Insurance Plan is when a part of the premium is dedicated towards mutual fund investments, while the rest is after the life term of the insurer. 

Whole Life Insurance – As is evident from the name, Whole Life Insurance provides life cover for the entire life of an individual, as opposed to a particular duration. However, some plans may restrict this to a period of 100 years.

Child’s Plan – This plan is a combination of insurance and investments, which is aimed at provided financial aid to children throughout their lives. The death benefit is available as a lump-sum payment after the death of parents.

Money-Back – This is a policy that pays back a certain percentage of the plan’s sum assured after a particular duration. This is known as survival benefit.

Retirement Plan – Also known as pension plans, these policies are a combination of insurance and investments. A portion of the premiums is dedicated to creating a retirement corpus. This is available as a lump sum or monthly payment after you retire.

Motor Insurance

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Having a vehicle registered is not enough – it should be insured as well. This is where motor insurance comes in as it provides financial assistance in case of accidents. Motor insurance can be availed under the following three categories of motorized vehicles. 

Check out Smart Drive Private Car Insurance brought to you by Bharti AXA General Insurance. It allows you to secure your vehicles from losses and liabilities. You can choose a comprehensive coverage or third-party coverage and also include several add on covers for maximum protection. Find out more here

Car Insurance – A car insurance is for a private car which is owned by any person. 

Two-wheeler Insurance – A two-wheeler insurance is for vehicles, including bikes and scooters, that are owned by individual persons. These vehicles are covered under two-wheeler insurance plans. Read more here.

Commercial Vehicle Insurance – If you have a vehicle that is used for any commercial purpose, you will need to apply for commercial vehicle insurance. This policy will help you ensure that your business automobiles stay in the best of shapes, reducing losses significantly.

Health Insurance 

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Health insurance is a must for everyone, as it provides financial assistance to people when they have to go to hospitals for treatments. Some plans today also cover costs related to home treatments, before hospitalization or after discharge from the same. With medical expenses rising almost every year, buying health insurance is extremely important, especially if you want to reduce financial costs related to the same. 

digibank offers affordable health insurance that covers a wide range of treatments. It also allows you to make tax savings of up to INR 25,000 in a financial year. The best part – there are no medical tests, which means they can get immediate, low-cost cover for yourself and your family right now on the digibank app. Find out more here.

Individual Health Insurance – This type of healthcare plan offers medical care only to one individual. 

Family Floater Insurance – This policy allows you to avail health insurance for members of your entire family – this means that you do not have to buy a separate plan for each person. Typically, a couple and two of their children are provided with health coverage under one family floater policy.

Critical Illness Cover – These are specialized health plans that provide excellent financial assistance when the person is diagnosed with specific, chronic illnesses. These plans give a lump-sum payout, once the diagnosis is proved. It has more value than a typical health insurance policy.

Senior Citizen Health Insurance – As is evident from the name, this policy mainly targets individuals aged 60 years and more. 

Group Health Insurance –  This type of policy is generally offered to employees of an organization. They have been created in such a manner that older beneficiaries are removed, and new recipients are added, depending on the organiszation’s retention capability.

Maternity Health Insurance – These policies are a good option for a woman planning to conceive in the coming years, as it takes care of medical expenses incurred during pre-natal, post-natal and delivery stages. The policy covers all treatment related to both the mother and her newborn child.

Personal Accident Insurance – Accidents are quite frequent in our country, and this insurance will protect you from any financial liability that arises from injuries, disability or death caused by accidents.

Tip – In current times, if you are looking for a COVID-19 cover, we have you sorted here.

Travel Insurance

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Such policies ensure the financial safety of a traveller during the duration of a trip. This means that when compared to other plans, the period of travel insurance is quite short. Depending on the provider you choose, travel insurance offers financial assistance in different scenarios like loss of baggage, trip cancellation, etc. 

Ahead, we look at a few different types of travel insurance plans that you can avail.  

Domestic Travel Insurance – If you are a frequent domestic flyer, this insurance policy will protect you during travels within India. That being said, this insurance is not valid if you travel outside the country. Find out more here.

International Travel Insurance – If you are planning to visit other countries either for a vacation or a business trip, international travel insurance is always a good idea. This is because it can protect you against any unforeseen expenses during the trip, including loss of passport/baggage and medical emergencies. Find out more here.

Home Holiday Insurance – When you step out for a long holiday with your family, your home is at a security risk from robbers. This can lead to significant losses, which is why home holiday insurance is your safest bet. 

Property Insurance

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All buildings and stable structures are insured with property insurance plans. This can include either your home or office space. With this insurance, you can claim financial assistance in case your property faces any damage. An additional benefit of this insurance is that it also safeguards the content inside the property.

Home Insurance – A home insurance policy protects you from financial liabilities that may arise due to fires, burglaries, storms, earthquakes, explosions and other events. If you live in an area that is beset with such conditions, it is better to invest in a home insurance policy. 

Shop Insurance – A commercial space that is a prime source of income for you has to be protected with insurance. Shop insurance will, therefore, protect you from any liability that occurs due to natural calamities or due to accidents. 

Mobile Insurance

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Considering the rising price of mobile phones and their several applications today, it has become imperative to insure your device. Mobile insurance allows you to repair your phone in case of accidental damage, without any extra charge. Additionally, you can also claim the same in case your phone gets stolen, thereby allowing you to get a new device without any financial constraints. Before we conclude, keep these things in mind, irrespective of the policy you choose. 

Service benefits – Lookup service benefits like customer support, convenient pick-up & drop for your vehicle {in case of vehicle insurance} and an extensive network of cashless garages, for secure payment options if any. 

Choose the right sum – It is incredibly critical that you insure the right amount for a policy. If you insure too less, it might not be enough in case of an emergency

Speed of claims of the insurer – Claims is one of the most crucial reasons you buy insurance. That is why it is essential to check the duration of claims for any policy. 

by Megha Panjabi
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