Types of Insurance Policies in India

Know about the different types of insurance policies available in India.
Types of Insurance Policies in India
3 min

An insurance policy works as a financial shield to tackle with any uncertainties in life. It basically helps you stay financially prepared in case of any emergency, which may require monetary solutions. For example, a health insurance policy covers all medical expenses if you fall ill, or any medical emergency arises. At such a time, you do not have to worry about the funds but focus on getting the best treatment. An health insurance policy enables you to avail the quality healthcare services.

How many types of insurance policies are available in India?

As we know that there are many types of insurance policies available in India, you need to consider several factors when planning to buy an insurance policy. It is important to choose the right type of insurance to secure yourself and your family from financial risk. Therefore, consider factors like your needs, budget, coverage required, and more. You should compare policies offered by different insurers and choose the one that offers the best coverage at a reasonable cost.

Types of insurance policies

There are different types of insurance policies available in India:

  • Life insurance

  • General insurance

  • Pocket Insurance offered by Bajaj Finserv

Let’s dive into each category to understand what these insurance policies offer and how these secure you.

Life insurance

Life insurance covers the dependants in case of the untimely death of the policyholder. In such cases, the insurance company pays the sum insured to the policyholder’s beneficiaries.

Below are the variants of life insurance:

Whole life plan: Whole life plans provide policyholders with coverage for the entirety of their life (or till 100 years of age). This type of life insurance will remain active as long as you pay the premiums. Usually, individuals prefer this type of plan to create a corpus. The money received at maturity can work as savings as well.

Term plan: Term plans provide a life cover for a specific term. The insurer gives the payout only in case of the policyholder’s demise. This plan helps you to ensure your family and loved ones stay financially secure in your absence.

ULIP: ULIP stands for unit-linked insurance policy, a two-in-one policy, combining insurance and investment in a single plan. This type of life insurance policy provides dual benefits, which means you can invest to create wealth and stay financially secure for any emergency. You can invest in equities, debt markets, shares, and more. In case of the insured person’s demise, the nominee gets the sum assured or fund value, whichever is higher.

ULIP further comes in different variants catering to the specific needs of individuals. Here’s the list of different kinds of ULIP you can choose to buy.

  • Child plan

  • Retirement plan

  • Investment plan

  • Savings plan

  • Protection plan

General insurance

All non-life insurance policies fall under general insurance. These policies are for shorter tenures, ranging from 12 months to 10 years, depending on the policy that you choose.

Following are the different types of general insurance:

Health insurance: Health insurance covers medical and healthcare expenses. These policies further come in various sub-categories catering to every individual’s needs. These are individual health insurance, family health insurance, senior citizen health insurance, and more.

Here’s the list of health insurance sub-categories:

  • Individual health insurance - A plan for every individual, covering medical expenses based on their specific requirements.
  • Family health insurance or family floater health insurance - A family health insurance plan covers all family members under a single plan.
  • Senior citizens health insurance – A plan specifically designed for individuals above 60 years of age, considering their medical needs at an older age.
  • Group health insurance – A plan for larger organisations, groups, or companies, offering a common health cover to their employees or members.
  • Maternity health insurance – A maternity health insurance covers pregnancy-related expenses like delivery, newborn baby’s vaccination, and other treatment costs.
  • Top-up health insurance – A plan that works as an extra protection over and above your regular health insurance plan.

Motor insurance: Motor insurance policies give you financial coverage for repairing or replacing any parts of your damaged vehicle. Covers damages caused due to theft, accidents, and natural or man-made calamities. You also get coverage for damages caused to the third party. Plus, as per IRDAI rules, insurance companies must also provide a personal accident cover up to Rs. 15 lakh to the policyholders.

You can choose a motor insurance policy based on your vehicle in the following categories.

  • Two-wheeler insurance – Provides insurance coverage for two-wheelers against damages or losses. You get a comprehensive two-wheeler insurance that covers damages caused to your own vehicle and third party. According to the new IRDAI rule, every new two-wheeler owner must have a 5-year insurance policy. After completion of this tenure, you can choose to buy two-wheeler insurance as per your requirement for whatever duration you want.
  • Car insurance – Offers insurance coverage for private cars against damages or losses. You get a comprehensive car insurance that includes own damage and third-party coverage. According to the new IRDAI rule, every new car owner must have a 3-year insurance policy. Same as above, after completing this tenure, you can choose to buy a car insurance for one year or more years, depending on your needs.
  • Commercial vehicle insurance – This type of motor insurance policy covers vehicles used for commercial purposes. It includes goods carrying vehicles and passenger carrying vehicles.
  • Third-party insurance – You can also buy only a third-party insurance for car or two-wheeler. As per the Motor Vehicles Act, it is mandatory for all vehicle owners to have a third-party insurance. This type of motor insurance policy covers the damages caused to the third party – their vehicle or property by your insured vehicle. You even get coverage for their medical expenses if caused any accidental injury to the third party.
  • Own-damage insurance – If you only have a third-party insurance, then you can opt for an own damage cover. This insurance policy covers damages caused to your own vehicle due to accidents, theft, natural calamities, or man-made activities. The third-party insurance does not cover the damages caused to your vehicle. Therefore, having an own damage cover would prove beneficial.

Home insurance: A home insurance policy covers your home against losses arising out of fire, accidents, theft, flood, or earthquake. You get coverage for repairing or replacing any damaged content in the house or the entire house. You also get coverage for lost jewellery or content in theft. Some home insurance policies also give you cash to pay for immediate requirements like clothes, medicines, or temporary accommodation.

Pocket Insurance and Subscriptions – These are small-ticket insurance offered at pocket-friendly premiums. You get coverage like Dengue Cover, Hospital Cash Cover, Domestic Holiday Cover, and more. Also, covers like Mobile Screen Insurance, Trek Cover, Wallet Care, Key Safeguard, etc.

You can look for affordable insurance policies at Bajaj Finance Insurance Mall. Here you will get a range of insurance policies offered by leading insurers in India. You can compare and buy insurance policies online in just a few steps.

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Frequently asked questions

What is an insurance policy?

Insurance is a legal contract between the insurance company and the policyholder. This contract defines the coverages offered, the sum insured that the insurer would pay to the policyholder when claimed, and terms and conditions.

Which is the most important insurance?

Having an insurance policy is critical. Every type of insurance policy is essential in its own way. It gives you the required financial cushion at the time of need. You can buy an insurance policy based on your requirements. You can choose to duration – short-term or long-term, depending on your needs.

What is the difference between whole life and term life insurance?

Whole life insurance covers you for the entire life (till 100 years). Term life insurance covers you up to a specific term chosen on the policy. You get a cash value on whole life insurance at maturity. Term plan insurance gives you the sum insured only in case of the policyholder’s demise.

How do I get the complete details of my policy coverage?

You will find the entire details of coverage on your policy document. You can download the policy document online from the insurer’s official website. You will also receive the policy document copy in your registered email. The insurer sends the policy document within 5-7 days from the purchase date.

What are the two basic types of insurance policies?

The two basic types of insurance policies are:

1. Life insurance: It pays out a sum of money to a beneficiary upon the death of the policyholder.
2. General insurance: A policy that covers a wide range of risks that people may encounter in their daily lives.

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