In the context of financial planning, today’s person has a wide range of alter-natives to select from. The majority of individuals place a premium on money accumulation while compromising on security. Insurance must be the initial step in financial planning in the context of growing inflation, changing lifestyle patterns, and the shift to nuclear families. Prior to addressing any other problems, you must first insure your life for the financial stability of your dependents. We’ll go through the many forms of coverage in this post.

Insurance is a legal contract between- a person and an insurance business in which the insurer guarantees to provide financial protection against unforeseen events in exchange for a fee. Now, let’s check how many types of insurance are there in the market. They are:

• Life Insurance
• General Insurance

Life Insurance

Painful experiences and occurrences abound throughout life. Any unexpected event can flip your and your family’s lives upside down without notice. While you can’t predict when a life-changing event will occur, you can surely prepare yourself and your family members. Purchasing a life plan is one option to offer this safety net.

Life insurance is insurance that protects your loved ones financially in the event of your demise or disability. A few life policies also guarantee financial security when you retire for a set amount of time. Overall, a life insurance policy is recognized to provide financial security to you and your family members amid life’s difficulties.

You have the choice of paying for your life insurance plans in one big payment or over a certain length of time. The premium is the amount you pay toward the coverage. Your insurer guarantees to financially safeguard you and your family members in the event of an unanticipated life event in exchange. Depending on the kind of life insurance coverage you buy, you can make use of the policies’ features. The numerous types of life insurance policies and their advantages are shown below.

Types of Life Insurance

1. Term Life Insurance

It is one of the most simple and cost-effective life insurance policies available. It protects you for a set period of time, as the name implies. After you die, your family members will get a lump-sum payment from this policy. The money you get is tax-free and can be utilised by your family as needed. If you live over the policy’s term, however, no payouts will be paid to you or your spouse. You may also use the term calculators to estimate the cost of a policy depending on the insurance and rider features you choose.

2. Whole Life Insurance

The insurance is named from the fact that it insures you for the rest of your life. In the tragic case of your death, your family members will be compensated. Furthermore, your dependents are eligible for a benefit that builds up over time.

3. Endowment Plans

Endowment policy, like the term life policy, covers you for a set length of time. In the context of your early demise, your loved ones will get a lump-sum payment. Unlike term insurance, however, you are eligible for maturity payouts after the policy period has expired.

4. Unit Linked Insurance Plans (ULIPs)

ULIPs offer both life insurance and investment protection. A portion of the premium is used to cover life insurance, while the remainder is invested in either equity or debt funds. Following your demise, the coverage provides a single payout from your life plan to your family members. It also compensates you for the profits you made on your investments.

5. Child Plans

The policy gives economic security to your kids, as the name implies. Your kid receives a lump-sum payment if you die. Furthermore, your kid gets a monetary reward for achieving each of the milestones.

6. Pension Plans/ Retirement Plans

This insurance plan allows you to start saving for retirement. You will keep receiving funds even after you retire in this manner. The sum assured, on the other hand, might be claimed by your family members following your demise.

General Insurance

General insurance is a legal agreement between- the insured and the insurer that protects the policyholder financially from losses other than death. A general insurance plan, in essence, compensates for financial losses suffered as a result of liabilities such as your house, automobile, and vacation. The insurance will pay a lump-sum payment to cover damage or loss to your car, medical bills for unanticipated situations, loss due to fire or robbery, and financial difficulties encountered during your trip. The common types of General insurance plans in the market and their advantages are shown below.

Health

A health insurance plan pays for expenditures incurred as a result of unforeseen medical events. You have the option of submitting a cashless claim at a network hospital designated or submitting a refund claim after the treatment is completed.

Motor

Motor insurance protects your car financially in the event of damage or loss caused by accidents, robbery, or natural or man-made catastrophes. Motor insurance is available for both personal and business cars. Furthermore, the Motor Vehicles Act of 1988 refers to the public.

Travel

A travel insurance plan, as the name implies, safeguards you from financial obligations when travelling abroad or inside India.

Home

Home is a type of general insurance coverage that covers your house financially from -environmental and man-made disasters, fire, and theft. The coverage extends to your valuables inside your house as well.

Difference between- General & Life Insurance

Your life is protected by life insurance. If the policyholder passes away prior to the end of the policy’s term, the beneficiary receives the money insured by the provider. Based on several factors, life differs from general insurance.

As we all know, general insurance plans are short-term agreements, while long-term contracts provide life coverage. In the context of life insurance, the payouts and sum assured are paid out when the policy matures or when the policyholder dies. General insurance, on the other hand, reimburses the claim or the actual loss amount when a specific incident happens.

Since life insurance is a long agreement, the premium is paid throughout the duration of the plan or until the required premium payment period expires. In the case of general premiums, they are paid if the plan is renewed in the following year.

A ‘Must-have’ General Insurance

Given the rising cost of healthcare, health insurance is a must-have, where'as travel and home financial coverage may assist you in avoiding a lot of trouble. Third-party liability automobile insurance is the only type of general insurance that is required. Before a car may drive on Indian roads, it must have this level of coverage.

Every sort of policy has a specific goal in mind: to provide coverage for a certain component. So, if you haven’t already purchased general insurance, keep in mind that you need to surely identify your requirements and purchase the coverage you desire as quickly as possible.