The following are the major types of Insurance Policies available to interested consumers:
1. Life Insurance: Life insurance provides financial security to the insured's family in the event of
death. It guarantees a payout to the nominee, either as a lump sum or in regular installments,
helping them cope with financial challenges. In India, life insurance also offers tax benefits
under Section 80C of the Income Tax Act, making it an attractive savings instrument.
2. Term Insurance: A term plan offers pure life cover for a specific duration, such as 10, 20, or
30 years. It is the most affordable type of life insurance, providing high coverage at low
premiums. However, there is no maturity benefit—if the policyholder survives the term, no
payout is made. Term plans can also include riders for added protection, such as accidental
death or critical illness cover.
3. Endowment Policy: Endowment plans are a combination of life insurance and savings. The
insured pays premiums throughout the policy term, and if they survive the term, they receive the
sum assured along with any bonuses declared by the insurance company. In case of death
during the term, the nominee receives the death benefit. Endowment plans are ideal for people
looking for life coverage along with a guaranteed payout.
4. Pension Plans (Retirement Plans): Pension plans help individuals build a retirement corpus.
There are two phases—accumulation phase, where the policyholder contributes to the fund, and
vesting phase, where they receive regular income (annuity) post-retirement. Some plans allow
partial withdrawals for emergencies. Popular options include National Pension Scheme (NPS)
and traditional annuity plans, which provide guaranteed income for life.
5. Health Insurance: Health insurance covers medical expenses incurred due to hospitalization,
surgeries, or critical illnesses. It may offer cashless treatment at network hospitals or
reimbursement for treatment taken at non-network hospitals. Family floater plans provide
coverage to multiple family members under a single policy. Health insurance is crucial due to
rising medical costs and can also provide tax benefits under Section 80D.
6. Unit Linked Insurance Plan (ULIP): ULIPs combine life insurance with investment. A part of
the premium goes towards providing life cover, while the remainder is invested in equity, debt,
or balanced funds as per the policyholder’s choice. ULIPs offer flexibility in switching between
funds and come with a lock-in period of 5 years. The returns on ULIPs are market-linked, so
they carry higher risk compared to traditional policies.
7. Property Insurance: This policy covers damage to buildings or contents due to risks like fire,
flood, earthquake, burglary, or vandalism. Home insurance, a type of property insurance,
protects both the structure and contents of a house. It is essential for homeowners to safeguard
their property from financial loss due to unforeseen events.
8. General Insurance: General insurance encompasses all types of non-life insurance, which
provide protection against accidents, health-related expenses, loss of property, or legal
liabilities. Some common types include:
Motor Insurance: Mandatory for all vehicle owners in India, covering vehicle damage, third-party
liabilities, and personal accident.
Travel Insurance: Covers losses during travel, such as flight delays, loss of luggage, medical
emergencies, and trip cancellations.
Health Insurance: As discussed earlier, it covers medical expenses.
Home Insurance: Protects homes from risks like fire, theft, or natural disasters.
Each of these insurance products is regulated by the Insurance Regulatory and Development
Authority of India (IRDAI), ensuring fair practices and protection for policyholders. Insurance
policies in India also offer tax benefits, which enhance their appeal as a financial planning tool.
