What is Insurance and the 7 Major Types of Insurance!

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what is insurance and types of insurance

Insurance is a way of ensuring we are protected from financial loss. People use it for risk management to prepare themselves for an accidental loss that may result in financial debt. The people who are responsible for providing insurance are often insurance companies, insurers, or insurance carriers. When you buy an insurance policy you are termed as insured. The insured receives a contract that covers all the terms and conditions related to the insurance called the insurance policy. You have to pay a certain amount to the insurer as a premium to be considered as insured. If you experience a loss and it is covered under the insurance policy, you can file a claim and the insurer will incur all the expenses associated with this loss. The insurance could be of various types and we have discussed them in detail over here.

 

 

How Many Types of Insurance Are There?

You never know when life is going to take a sudden change and the type of problems you will have to face. It’s always good to stay prepared for facing the worst situation. Here, we have shared mainly the seven types of insurance that you can take advantage of.

 

#1. General Insurance

General insurance is just as the name suggests, a general one. The insurer is going to offer financial compensation for the loss of anything other than your life. So in this the liabilities related to your vehicle, house, health, travel, theft, etc will be included.

It would issue the general insurance policy clearly stating that they are responsible for covering the damage to your house or vehicle’s accident, illness, and more. Your financial worries about the issues that have been planned by you are dealt with easily.

For example, a fire breaks out in your house then you can claim the general insurance and you will be paid for the damage to the things that are included in your policy.

 

#2. Life Insurance

The insurer and insured sign the contract of life insurance offering the guarantee of money after the death of the insured. The money you pay in the form of instalments as premiums make you liable to the financial compensation.

The application includes details of the insured’s health condition including details of the past like surgeries, illness, or anything that was major. It also contains the name of the beneficiaries so that death benefit is immediately available to them. Life is definitely one of the most precious property for individuals so life insurance is definitely one of the first ones people apply for.

 

#3. Health Insurance

Health insurance is a type of insurance that covers medical expenses that may include dental to surgical level treatments.

There are two ways in which the insurer will make the payment. One way could be to pay you for the illness or injury you have suffered and the other way is to pay the health care where you went to get the treatment done.

In most cases, health insurance is included as an additional benefit for the employee in companies. They deduct the premium from the salary. You must check the rules that are set for your insurance policy before applying for it.

Also read: What is Title Insurance? Reasons Why You Need Title Insurance

 

#4. Property Insurance

Property insurance applies to an immovable structure. It could be your home, shop, office, or any other thing.

This type of insurance provides financial compensation to the insured of the structure if any sort of damage occurs to it. It even includes compensation to the person other than the owner if he or she gets injured on the property.

This can be further divided into renters insurance, flood insurance, homeowners insurance, and more. Every policy has some or the other exception. So the personal property with high value may not fit the property insurance. You may have to discuss with the insurer and choose customized insurance called a rider. This is specifically designed for expensive property holders.

 

#5. Travel Insurance

Most of the companies that sell tickets online or book travel packages provide the customers with the option to choose travel insurance. The policies may differ as some may even include the rented equipment or vehicle or personal property. However, the main coverage includes the trip’s cancellation or rescheduling charges, baggage, or a medical expense. In fact, in case of an emergency like loss of passport the insurance incurs the cost of replacing it with a new one.

 

#6. Motor Insurance

Motor insurance is an insurance policy purchased by the vehicle owners to mitigate the costs associated with accidental damage of vehicles like car, bike, or truck. These days road accidents are quite high in number especially the ones involving minor damage.

So you don’t have to burn your pocket for it. You can instead pay a premium amount and the insurer will pay the whole amount associated with the accident. It depends on various factors like gender, age, driving experience, traffic violation record, and more.

Also read: Difference Between Critical Illness And Life Insurance

 

#7. Fire Insurance

Fire insurance is a form of property insurance but it targets a specific cause of damage. If you plan on applying for the property insurance, additional fire insurance will be of great benefit. It will cover the cost of repair or replacement or reconstruction of the property if it is damaged due to fire breakout.

Also read: Complete guide to fire insurance and its benefits

It has certain exclusions like war or nuclear risk and that is understandable. If anything like that occurs the whole country has to suffer so you can overlook these exclusions.

 

 

Conclusion

Here, we have covered the major types of insurance. Other than these there are also malpractice, liability, and other types of insurance. With multiple types of risk involved in our lifetime, there are multiple types of insurance based on the individual’s need. We would highly recommend you to check the service benefits, value, terms, and conditions of the insurance policy before choosing one. ICICILombard is a good option that offers great services and has almost all types of insurances. Also, the insurer must provide customer support so that you can immediately resolve your queries and the insurance proceeds inflow.