We live in the world's second most populous country, with a population of approximately 138 billion people, and 30% of our population lacks health insurance. In the year 2021, only 514 million Indians have taken some form of health insurance (source: Loopheath).1 In terms of life insurance, only three out of 100 people have a life insurance policy. We understand that purchasing insurance is a difficult and complicated process, which is why most people put it off, but it is one that is critical.
As young professionals, we work to have fun, enjoy vacations, purchase the luxuries that we've always wanted, and of course, survive. We also do it to provide ourselves and our loved ones with a sense of financial security. Most people believe that to become financially secure, they must save money or invest it in stocks, mutual funds, and real estate, but they overlook one important step: getting insured.
Even when you believe you are financially secure, a sudden or unforeseen expense can significantly undermine that security. Depending on the severity of the emergency, such situations may also leave you in debt. This is where having insurance can protect you from unforeseen expenses without burning a hole in your life savings.
If you're having trouble figuring out your finances, and want to learn more about investments and insurance planning, we have the perfect learning pathway for you, Finance Pass: Personal finance made easy. This comprehensive course will teach you how to save money and secure it for your future, and your loved ones.
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Before we get into the different types of insurance, you should know that simply knowing the other insurance policies does not help. You must also understand how each of these schemes work. You may not be able to protect your finances or the financial well-being of your loved ones if you do not have adequate knowledge of each of them.
- Life insurance
- Health insurance
- Motor insurance
- Travel insurance
- Property insurance
- Mobile insurance
- Small ticket insurance
According to the most recent economic survey, only 3 out of every 100 people in India have life insurance, which is frightening, to say the least (source: India.com). Life insurance is the most basic and important insurance policy of all. Here you, the policyholder, ensure your family's financial independence after your death. For example, if you are a working professional who supports your parents or children, your sudden death will devastate your family emotionally and financially. A life insurance policy protects your family from financial ruin by providing financial assistance in the event of your death.
Life insurance not only benefits your family by providing financial security to them, but it also provides tax benefits. In India, paying life insurance premiums entitles you to tax breaks under Sections 80(C) and 10(10D) of the Income Tax Act. Such tax breaks can help you make use of your insurance indirectly by saving more from your taxable income.
Types of life insurance
- Term plan
- Child’s plan
- Endowment plan
- Whole life insurance
- Money back plan
- Retirement plan
Did you know, in India, medical inflation is around 14%, which means that any medical procedure that might cost Rs 2 lakh today could cost Rs 4 lakh in 5 years (Source: Economic Times). With rising medical inflation in India and pandemics like COVID-19 becoming more and more of a real health risk, purchasing health insurance has become a requirement.
This is a type of general insurance that pays out money to policyholders who are admitted to the hospital for treatment. Furthermore, some plans cover the cost of treatment received at home before hospitalisation or after discharge. Health insurance provides coverage for medical expenses, cashless claims and tax benefits.
Types of health insurance
- Individual health insurance
- Critical illness cover
- Group health insurance
- Personal accident insurance
- Preventive healthcare insurance
- Accident insurance
- Senior citizen health insurance
Note: To get life or health insurance, you may be required to undergo some medical tests, the results of which will be used to determine your eligibility and the amount of premium you will pay. The older you are, the higher your premiums will be, so it is best to get insured as young as possible.
Something both you and I can probably relate to is that we adore our cars and motorcycles, and we treat them as our babies. And to think that if that baby, your car or motorcycle, gets involved in an accident, the cost of repairing or replacing it will leave a significant dent in your bank account. That's where having motor insurance comes in handy.
If your vehicle is involved in an accident, your insurance policy will provide you with financial assistance for the vehicle's repair or replacement. There are mainly three types of motorised vehicles covered by motor insurance:
- Car insurance
- Two-wheeler insurance
- Commercial vehicle insurance
In addition to reducing losses, these policies ensure that your vehicles are in good condition.
Imagine having your flight cancelled at the last minute, or worse, losing your luggage at baggage claim.
For unforeseen and annoying situations like these, having travel insurance comes in handy as it ensures financial security while you’re on the road or in the air. In comparison to other insurance policies, this is a short-term policy that is valid for the duration of your trip; you must pay a small one-time fee to protect yourself from all types of travel risks.
This policy provides you with financial assistance in situations such as booking cancellations, baggage loss, and hospitalisation in the event of an accident during your trip.
Types of travel insurance
- Domestic travel insurance
- Insurance travel insurance
- Home holiday insurance
We put a lot of time, money, and effort into building or purchasing our homes. But events like floods, storms or other natural disasters can cause colossal property losses, every year. You can protect yourself from this dismal reality by having your property insured.
If such a thing should happen to your home having this insurance on hand can help provide you with financial assistance if your property sustains any kind of damage. Such a plan also protects the property's contents financially. Property insurance protects against fires, burglaries, floods, and other natural disasters.
Types of property insurance
- Home insurance
- Shop insurance
- Office insurance
- Building insurance
In today's world, losing or breaking your phone by accident means losing contact with the rest of the world. Phones are now more than just a necessity; with premium phones like the iPhone, they are a luxury. Having such phones stolen or accidentally damaged will severely impact your finances unless you have your device insured. In the event of accidental damage to your phone, mobile insurance allows you to reclaim the money you spent on repairs.
Additionally, you can claim the same if your phone is stolen, so you can replace it with a new one.
Small ticket insurance
Small ticket insurance policies are sachet insurance plans that limit your financial liability for a set period of time, usually up to a year.
These insurance policies enable you to safeguard your assets against specific damage or threats.
Some examples of small ticket insurance are:
- Train ride insurance
- Cab ride insurance
- Flight insurance
- Baggage insurance
- Mobile or laptop screen insurance
- Dengue or COVID-19 insurance
These are all the popular types of insurance available in India that you can look into to make yourself and your family financially secure. To learn more about how you can save money and grow yourself financially, you can register for our "Finance Pass: Personal finance made easy" course. Several other finance courses are in the works, including budgeting, emergency funds and investing in mutual funds. Sign up with Kool Kanya today!
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