What are the different insurance types?

by Radhika Adsule Financial Expert

Buying insurance is an essential aspect of our financial strategy. Insurance, whether Health, Life, or other forms, serves as a safety net in the event of a calamity. And, as crucial as it is to have insurance, it is also essential to understand what it covers and states.

What is insurance? What are its different types?

A contract between two parties, the insured and the insurer, is known as insurance. Upon the occurrence of a calamity, the insurer commits to pay the policyholder a pre-determined amount. The beneficiary must make frequent premium payments to collect the funds. Death, illness, theft, fire, earthquake, and other unforeseen events can occur anytime. You must buy an Insurance Policy to cover a variety of risks.

What are the different types?

General Insurance:

The umbrella category of General Insurance encompasses all Non-Life Insurance Plans. As compared to Life Insurance Policies, General Policies come for a shorter period. The following are the most popular ones:

Health Insurance

This insurance is meant for covering the expenditures related to you or a family member's health. The coverage pays for the treatment of a specific serious illness, hospitalisation fees, and day-to-day medical care, among other things. Health Insurance is a requirement in today's world, given our way of living.

Vehicle Insurance

Using Car Insurance or Two-Wheeler Insurance, you safeguard your bike or four-wheeler from theft, own damage due to accidents, and calamities. This insurance includes Third-Party Liability, which is compulsory under Motor Vehicle Act.

Home Insurance

One of our most prized possessions is our house. As a result, you must secure your home with Home Insurance Coverage against any damage caused by natural or human-made disasters.

What are the tax benefits linked with insurance?

The biggest reason people buy any of this insurance is to take advantage of the numerous tax benefits that come with it. The following are primary ones you are eligible for:

If you opt for a Health Policy for yourself or your family, you are eligible for a tax deduction of Rs. 25,000. The exemption for premium payments made under the age of 60 is Rs. 25,000. If your parents or family members are over 60, you are eligible for deductions of Rs. 50,000.

Furthermore, Health Insurance Policies bought by Hindu Undivided Families (HUFs) are eligible for tax benefits of Rs. 25,000 if the premium gets paid for one of the HUF members. Expenses for any preventative check-up are covered by Health Insurance and qualify you for Rs. 5,000 tax deduction, whether the check-ups are for yourself, your spouse, children, or your parents.

Given the options available, make an informed decision. Choose the plans based on your needs.