Exploring Different Types of Insurances: A Comprehensive Understanding

Life is full of uncertainties, be it illnesses, sudden mishaps, thefts, losses or accidents. On the other hand, different types of insurance policies can help you recover from such mishappening by helping you out financially. Thus, insurance isn't just a luxury but an absolute necessity in anyone's life. 

Things may get a little overwhelming for someone who's just getting started with exploring different types of insurance. But fear not! Our comprehensive guide to understanding different types of insurance is here for the rescue. 

Generally, all the different types of insurance are categorised into two broad categories, which are: 

1. General Insurance
2. Life Insurance 

Let's find out more about these two different types of insurance and how they work! 

1. General Insurance

General insurance covers anything and everything that cannot be covered under life insurance but is an essential aspect of human life. The different types of insurance that fall under general insurance are fire, vehicle, health, and more.

Let's find out in detail about the different types of general insurance that you may come across:  

1. Fire Insurance

Out of all the different types of insurance, fire insurance is one of the most frequently opted-for. The insurance provides coverage in case of damage caused by accidental fires. The insurance company pays for the damages caused by the fire till a specific period. The coverage period for fire insurance is usually a year, but you can keep renewing it. The renewal process includes paying a particular premium amount. The premium is typically a lump sum paid by the insurance holder, but you can also pay it in instalments. However, to avail of the fire insurance, you have to prove that the fire was accidental and not intentional. The insurance company may even need to assess that there were 'real' losses solely caused by the fire. 

2. Vehicle Insurance

Vehicle or automotive insurance is mandatory for buying a motor vehicle, making it an important type of insurance. The insurance primarily covers damages caused to the vehicle or people in the vehicle in case of an accident. The insurer also provides coverage for any compensation that the operator/owner of the motor vehicle is liable for when there is a road accident. Aside from accidents, any damage caused to the vehicle through theft or natural disasters is also covered under vehicle insurance.  

3. Travel Insurance

This, out of all the different types of insurance, covers any mishaps and accidents that might happen during travelling and ruin the trip. Travel insurance thus covers accidents, illnesses, injuries, flight delays, lost luggage, cab delays, etc. Some of the best travel insurance companies also cover sudden evacuation alerts for international travellers due to war, political unrest or natural calamities. Travel health insurance is also popular among international students as it provides health coverage during their time in the host country. The premium or the purchase price of travel insurance is decided based on age, the trip destination, cost, etc.  

4. Health Insurance 

Among all the different types of insurance, health insurance is one of the most essential. With healthcare costs on the rise, it makes healthcare somewhat more accessible for people. Especially if you are an international student, health insurance can ensure good quality healthcare without breaking your student bank account. Health insurance covers all the medical expenses of the insurance holders. The contract between the insurance company and the insured individual provides coverage to the insured for some specific, pre-decided illnesses. Many health insurance companies offer add-ons for mental health, pre-existing conditions, and dental care with their base health insurance plans. The premium for health insurance can be paid in instalments or lump sums, like many other different types of insurance. The claim can be made directly, cashless or as reimbursement after the treatment. 

5. Miscellaneous and others 

Other than the different types of insurance mentioned above, other types of insurance are mentionable here. Here are some of them: 

• Marine Insurance: This type of insurance covers every damage that happens in the perils of the sea. It provides coverage against damages caused by collisions, pirate attacks, and ship fires. Marine insurance is provided for ships, cargoes, and freight. 

• Crop insurance: This type of insurance provides coverage to farmers in case of failed crops. It covers floods, droughts, accidental crop fires, and other hazards. 

• Cattle insurance: As the name suggests, cattle insurance covers the death of cattle for various reasons, such as disease, accidents, and childbirth complications. 

• Burglary insurance: Essentially a part of property insurance, burglary insurance provides coverage against the losses caused by burglary and theft. 

• Contents insurance: An important insurance for international students, contents insurance provides complete coverage for a specific item, like a laptop or smartphone, in case it gets stolen or damaged. Student rental insurance also comes under contents insurance and thus provides full coverage of your belongings in your student accommodation. However, remember that insuring some items may be more expensive depending on their value. 

2. Life Insurance

A life insurance policy is one of the most popular types of insurance people get to insure their lives. In exchange for a premium that is paid monthly, quarterly, or yearly, the insurance company insures the life of the person who holds the policy. In case of the policyholder's death or at the end of the policy term, the insurance provider pays a lump sum to the insured individual. The insurer company generally requires your medical history and the list of habits (smoking, drinking, history of risk-taking behaviour, etc.) for assessment before the insurance agreement is made. 

Life insurance comes with different policies that you can choose from to fit your coverage needs and budget better. Let's find out what are these different types of insurance policies: 

1. Whole life policy

The whole-life policies come with a fixed premium for the insured's whole life. Insurance companies provide coverage only after the deal with the insurer, and the lump sum is paid to a specifically 'nominated' person, popularly known as a nominee. However, you might also restrict the premium period to 20-30 years.  

2. Endowment policy

Endowment policies are more time-restricted than whole-life policies. Thus, the insurance company is responsible for paying the insured individual a specific lump sum after the decided premium period or if the individual dies suddenly.  

3. Joint life policy 

Two people take joint life insurance policies at a time. Both insured individuals are supposed to pay their share of the insurance premium. The insurance company then pays the insurance money to one of the individuals in case of one person's cessation. Since the insurance benefits are joint and the coverage is good, this specific life insurance policy is opted for by spouses and business partners together. 

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4. Annuity policy 

Annuity policies are a popular life insurance choice among the elderly since the insured coverage is paid to the insured party after reaching a specific age and not after their death. The policyholder can use the money coverage to live a comfortable life and plan their retirement. The money is paid by the insurance company to the insured on a weekly, monthly, or yearly basis based on whatever conditions the agreement documents consist of. 

5. Children's Endowment policy

If the main focus of the insured party is to ensure a secure future for their children, this endowment policy is a perfect choice. Children's Endowment policies can cover the children's education and marriage expenditures after the parents reach a certain age or if they die suddenly. The insurance company pays the insurance money to the children of the insured individual after they have reached a certain period based on the agreement documents. 

Insurance is essential for everyone, especially in today's economic conditions. Thus, understanding your own needs and exploring different types of insurance options and the best student insurance plans can be a great financial choice, especially if you are a student. We hope our comprehensive guide to different types of insurance helps you make the most out of insurance policies and choose what's best for you!