Insurance & Its Types: Life Insurance, General Insurance; Classification of Risks; IRDA Commerce YouTube Lecture Handouts Part 2

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Insurance & Its Types: Life Insurance, General Insurance; Classification of Risks; IRDA|Commerce

Life Insurance

Whole Life Insurance

It offers life cover to the policyholder for their entire life until the premium is paid. If the insured person passes away, the beneficiary receives maturity benefit. Those who want to remain insured for the whole life is an ideal plan.

Term Life Insurance

It offers death benefit in the form of lumpsum sum assured, which is provided to the beneficiary if the policyholder has a sudden demise. It is the most preferred policy as it is affordable and offers decent coverage.

Universal Life Insurance

A form of permanent insurance, meaning coverage can last for your lifetime so long as premiums are paid. This is in contrast to term life insurance which only provides coverage for a set period of time, such as 10 or 20 years, (Very few companies in India offer it) .

Variable Universal Life Insurance

A permanent life insurance policy that offers coverage as long as the premiums are paid is known as variable life insurance. All types of variable life insurance have three components: Death benefit, Cash value, Premium. (Very few companies in India offer it)

Money-Back Policies

The insured person gets a percentage of sum assured at regular intervals, instead of getting the lump sum amount at the end of the term. It is an endowment plan with the benefit of liquidity-receive amount at the end of period is sum assured bonus.

United Linked Insurance Policies (ULIP)

The premium paid is half invested in insurance coverage, and the rest amount is invested in market securities, based on the policyholder՚s risk factor, the insurer diversifies your fund in equity, debt, or hybrid assets. ULIPs have a lock-in period of 5 years. It allows partial withdrawal. It offers the benefit of life cover and the opportunity to create a significant corpus for your future.

Pension Policy

An insurance contract that specifies pension plan contributions to an insurance undertaking in exchange for which the pension plan benefits will be paid when the members reach a specified retirement age or on earlier exit of members from the plan.

Endowment Plans

In case of policyholder՚s death, the nominee receives the sum assured as a death benefit. If the policyholder survives, he/she gets both maturity amount as well as the accumulated bonus.

Accident Cover

Accident insurance covers qualifying injuries, which might include a broken limb, loss of a limb, burns, lacerations, or paralysis. In the event of your accidental death, accident insurance pays out money to your designated beneficiary.

General Insurance

Motor Insurance

An insurance policy that covers the policyholder in case of financial losses – resulting from an accident or other damages – sustained by the insured vehicle. A comprehensive motor insurance policy covers damages to third-party and third-party property along with compensating for own losses as well.

Health Insurance

A type of insurance that covers medical expenses that arise due to an illness. These expenses could be related to hospitalization costs, cost of medicines or doctor consultation fees.

Travel Insurance

An insurance product for covering unforeseen losses incurred while travelling, either internationally or domestically-covers medical expenses, lost luggage, flight cancellations, and other losses that a traveller can incur while travelling.

Property Insurance

The insurance that protects the physical goods and the equipment of the business or home against any loss from theft, fire, and any other perils. Generally, the property insurance covers the risks of all the damages caused by fire, theft, wind, smoke, snow, lightning, etc.

Mobile Insurance

When a mobile is lost or damaged, there is a chance of the data in the device being lost or stolen, creating problems of different levels, including financial damage. Today, people spend a lot in purchasing smartphones and any issue with them can create a hole in the pocket. To overcome such issues, companies are now offering mobile insurance in India. These policies provide coverage against theft or accidental damage to all types of phones, including smartphones.

Machines Insurance

Machinery breakdown insurance provides a security cover to the machines used by factories and industries. This insurance covers accidental breakdown and physical damage of the machinery, the cost of repairs or replacement of the damaged machine parts

Fire Insurance

A legal contract between an insurance company and the policyholder which guarantees that any loss or damages caused to the policyholder՚s property in a fire will be paid by the insurance company. Provides coverage against incidents of accidental fire, lightning, explosion, etc.

Marine Insurance

A type of insurance policy that provides coverage against any damage/loss caused to cargo vessels, ships, terminals, etc. in which the goods are transported from one point of origin to destination.

Commercial Insurance

A type of business insurance that offers solutions for industrial sectors including but not limited to construction, manufacturing, telecom, textiles, logistics etc. These solutions aim to offer a safety net for business operations and assets when the need arises, covers business liability and workmen compensation.

Factors Limiting the Insurability of Risk

  • Moral Hazard
  • Adverse Selection
  • Exclusions
  • Administrative Cost
  • Pro-Rata Clause
  • Premium Loadings
  • Deductible
  • Co-Insurance

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