Insurance: Types and Tax Benefits

Hello Everyone today Topics is What is insurance defination of the insurance and included the many type of the insurance in available so read the full article in this post…

What is Insurance?

An insurance provides coverage for specific loss, injury, illness or death in the form of financial damages. To get this coverage, you have to pay a specified amount to the insurer which is called the insurance premium.

The insurer and the insured sign a valid insurance contract, which is called an insurance policy. The insurance policy contains a detailed description of the terms and conditions in which the sum insured will be paid to the insured person or the nominee in the form of a claim for damages.

type of insurance

Mentioned below are the different types of insurance:

1. Life insurance

Life insurance is a contract providing financial coverage in the event of the death of the policyholder. Some life insurance plans provide financial benefits upon retirement or over a specified time period. Hence, life insurance protects the financial stability of their family even in their absence. These policies provide death benefits and claims to the nominees which can act as financial assistance after the demise of the policyholder. Life insurance can be divided into different categories.

A.Term Life Insurance:

Term life insurance provides financial protection to the family members of the insured against the untimely death of the insured during the policy term. If the insured survives the term of the policy, no benefit will be paid to him. The insured has to pay premiums in due course to ensure this coverage at the time of death.

B.Endowment Scheme:

An endowment plan is a combo plan providing insurance coverage and an opportunity to save for a long period. These plans are designed to be paid out after the maturity of the policy or after the demise of the policyholders.

Compared to term plans, this is a more expensive plan, as these policies offer maturity value along with incentives.

C.Unit-Linked Insurance Plan (ULIP):

A unit-linked insurance plan is a combination of insurance and investment. The premium paid for ULIPs is partly used to provide insurance cover, and the rest is used to invest in the chosen fund. Depending on the risk tolerance of an investor, he can invest in various funds provided by the insurance provider. The insurance company then invests the premium in equity, debt or money market instruments as per the investment plan intended.

D.Money-Back Life Insurance:

Money-back plan is a special form of life insurance policy, in which a portion of the sum assured is paid at intervals of the sum assured.

These plans are also entitled to insurer’s bonus based on the performance of the plan. In case of death of the Life Assured during the course of the policy, the entire amount is paid irrespective of the periodic survival benefits paid earlier to the nominee.

E.annual plan:

An annuity plan ensures regular monthly payments on the lump sum investment made by the individual. What actually happens is that on buying an annuity plan, the annuity provider invests your money in different asset classes and pays you back every month with the returns earned from the annuity amount.

F.Child Plan:

Child insurance plan is the right plan for those who want to save money for their child’s future financial needs, such as higher education. It is a combination plan offering life insurance as well as savings plan.

Also, ULIPs can have a one-child strategy, where a portion is invested and the rest is used to provide cover.

2. General insurance

Insurance can be divided into 3 types: life, health and general. Apart from our life and health, general insurance is also a valuable insurance. General insurance provides coverage in cases of injury, loss and theft of your valuables. General insurance premium rates and coverage depend on the form and scope of the policy. Usually a general insurance policy has a tenure of several years.

A.Motor Scheme:

Motor insurance provides cover on vehicles in the event of accident, damage, theft, vandalism etc. This type of insurance comes in two forms – comprehensive and third-party. A robust motor insurance policy provides 360 degree protection against any damage to your vehicle. It also gives personal injury cover and third-party liability coverage to the rider.

B.Health Insurance:

With medical expenses rising every year, it becomes very difficult to come up with a large corpus specially prepared to meet your medical emergency needs.

You need a health insurance policy to cover critical health conditions requiring high medical expenses for hospitalization and treatment. Health policy provides cover in case of these situations so as to save the policyholders from huge financial liabilities. There are 2 different categories of a health insurance policy – indemnity plan and fixed benefit plan.

C.Home Insurance:

Home and home insurance provides cover to your home in the event of damage, theft, terrorism or natural peace, etc. A home insurance policy will also cover conditions that are normal and man-made. The security of the contents and contents of the home will depend on the form of the policy you are purchasing.

D.Travel Insurance:

Travel insurance, which also covers your foreign trips, is another popular type of general insurance. You can buy a travel insurance policy to cover the loss or theft of any documents during the journey. There are also travel insurance policies that cover flight delays and medical emergencies. Travel insurance can be taken for both personal and business trips.

E.What is an insurance claim?

An insurance claim is a formal request to an insurance provider seeking payment based on the terms of the insurance policy. The insurance provider checks the claim for its validity and then, if approved, pays the insured to the claiming party (on behalf of the insured).

Benefits of buying insurance online

1. Customer Service

Shopping online is a big challenge for non-technical individuals. Insurance websites provide online chat facility for customers to request clarification on any query. You can also speak to your customer service executives over the telephone regarding any questions that can be answered over the phone. As individuals in India, customers can also have a face-to-face meeting.

2. Convenience

The advantage of online transactions is that you have ample time to assess each and every detail and choose the appropriate policy as per your needs.

In addition, because customers fill in personal data, there is less risk of false evidence.

3. Documentation Process

Online insurance offers hassle free reporting and limited paperwork. This ensures that you no longer walk away with ID photocopies or address proofs or any other paperwork required to purchase your policy. The policy premium is paid instantly, as it is handled electronically.

4. Price Comparison

When buying insurance online, one can prefer to compare premiums of insurers and thereby it becomes very easy to choose the right plan.

5. Low cost

Buying online reduces the various costs associated with paperwork, and the middlemen involved in the entire process.

tax benefits on buying insurance

You can avail income tax benefits when you buy an insurance plan.

1. Premium paid for health insurance up to Rs 25,000 for self and family and up to Rs 25,000 for parents for individuals below 60 years of age to claim tax deduction under section 80D Is worthy.

For individuals above 60 and parents above 60, the deduction limit increases to Rs 50,000 each.

2. Under section 80C, premium paid for life insurance is eligible to claim tax deduction of up to 1.5 lakhs in a financial year.

What is Insurance? : Types and Tax Benefits