In addition to the commonly discussed life insurance and health insurance, there are several other types of insurances that people need to be aware of. In general, an insurance is a contract between an individual (the insured) and an insurance company (the insurer) where the latter agrees to pay for certain losses that the insured may incur, in exchange for a regular premium paid by the insured.
The type of insurance you may need will depend on your individual circumstances and requirements. However, there are some types of insurance that everyone should consider purchasing.
Let’s see what are the different types of insurances available these days:
Life insurance is not for you, it’s for your family and dependents. If you were to die tomorrow, would your family be able to afford their living expenses? Would they need to sell assets to pay off loans and bills? If the answer is yes, then you need life insurance. An unexpected death can put serious strains on one’s family’s finances. Many people have a life cover of Rs 5-10 lakhs via traditional LIC policies. However, these covers are not of much use if you have a young family, negligible savings, and are the sole earning member of the family. A life cover should be large enough to take care of your family’s regular expenses for several years, all major financial goals, and also clear outstanding loans. Read how much life insurance you need to know the right cover for you. And once you know the figure, opt for simple plain term insurance plans.
Health insurance helps you pay for the costs of medical treatment in case you or any family members are hospitalized. Even if you are covered by your employer’s health insurance, it is important to have personal health insurance as well. This is because employer-provided health insurance often has upper limits on the amount of money they will pay for medical bills. Additionally, if you lose your job or are between jobs, you will not be covered by your employer’s health insurance. Medical emergencies can happen at any time, regardless of your age or health status.
You can have a base plan or you can have a Super-Top up plan in addition to the Base health insurance. Let’s say you have a base cover of Rs 5 lakh (provided by your employer or purchased by yourself). If you purchase a super top up plan of Rs 10 lakh with a threshold of Rs 5 lakh, then all bills above Rs 5 lakhs and up to Rs 15 lakhs will be covered under the super top-up policy.
If you don’t already have a health and life insurance, then I strongly urge you to consider purchasing both as soon as possible.
Now lets see what other insurance options are there.
Accident and Disability Insurance
Life insurance pays when you die. Health insurance takes care of hospitalization expenses. But what if you a rendered disabled, temporarily or permanently? This in most cases reduces person’s earning ability and also increases expenses due to disability – a double whammy. This gap in your risk coverage is filled by Accident and disability insurance covers. These policies cover scenarios like (i) death due to accident, (ii) permanent total disability, (iii) permanent partial disability (iv) temporary disabilities. But disabilities (permanent or otherwise) due to natural reasons are not covered. But you really can’t cover everything. Can you? Sadly, most of these policies do not have a very large cover. So you should buy the maximum you can get. Alternatively, you can purchase it as a disability rider along with your term insurance plan. But it’s best to have a standalone policy.
Critical Illness Insurance
These policies payout lumpsum money if the insured person is diagnosed with any critical illness that is on the list of the insurance policy. Like – cancer, etc. The money can be used for out-of-pocket and non-hospitalization related expenses. It also compensates (in a way) for lost income. Insurance companies are very smart and hence, you need to read the fine print about which diseases are covered and which aren’t, what’s the waiting period, etc. Though this policy is also available as a rider with life and health insurance plans, I personally feel that having a standalone policy offers flexibility and far better coverage than what would be offered in riders. If you have a family history of critical illnesses, then this is a must for you.
Auto insurance is a type of insurance that covers your car against financial losses in case of an accident. It is mandatory for all vehicles in India to have third-party car insurance, which covers the cost of third-party liability in case of an accident. You can also choose to purchase a comprehensive car insurance policy, which covers your own car as well as third-party liability. There are many reasons why you should purchase auto insurance in India. First, it is mandatory by law. Second, it can help you to protect your financial assets in case of an accident. Third, it can provide you with peace of mind knowing that you are covered in case of an unexpected event. There are a few different types of auto insurance policies available in India. Third-party car insurance is the most basic type of policy, and it covers the cost of third-party liability in case of an accident. Comprehensive car insurance is a more comprehensive policy, and it covers your own car as well as third-party liability. There are also a number of other add-on coverages that you can purchase, such as personal accident insurance and medical expenses insurance.
Homeowners insurance is a type of property insurance that covers the structure of your home and your personal belongings against damage or loss due to a variety of events, including fire, theft, natural disasters, and vandalism. In India, homeowners insurance is offered by non-life insurance companies (general insurance providers).
There are two main types of homeowners insurance in India. Structure insurance covers the physical structure of your home, including the walls, roof, foundation, and fixtures. Contents insurance covers your personal belongings inside your home, such as furniture, electronics, and jewelry. Homeowners insurance is an important financial protection for homeowners. It can help you recover the cost of repairs or replacements if your home is damaged or destroyed. It can also provide you with financial assistance if you are forced to temporarily relocate due to a covered event.
Home loan insurance
Home loan insurance is a type of life insurance that pays off your home loan in the event of your death. It is not mandatory, but it is a wise decision to purchase one, as it can protect your family from financial hardship if you pass away while your loan is still outstanding.
Many people have pets these days. But they don’t know that there is an option for purchasing insurance for pet animals also. Pet insurance is a financial safeguard that provides coverage for veterinary expenses and medical treatments for pets. It offers peace of mind to pet owners by mitigating the financial burden of unexpected accidents, illnesses, or surgeries. With the rising costs of veterinary care, pet insurance ensures that pets receive the necessary medical attention without putting a strain on the owner’s wallet. Moreover, it allows access to a wide network of veterinary clinics and hospitals. If you have a pet, you may want to know how much is pet insurance and what will it cost you. By purchasing pet insurance, one can prioritize their pet’s health and well-being, enabling timely and quality healthcare, and fostering a stronger bond between owners and their furry companions.
Travel insurance is a type of insurance that covers unforeseen losses incurred while traveling. This can include medical expenses, lost luggage, trip cancellations, and more. Travel insurance can be a lifesaver if you experience an unexpected event while traveling, as it can help you to recover your financial losses and continue your trip. So if you get sick or injured while traveling, you could be faced with a large medical bill. Travel insurance can help to cover these costs, which can be very expensive, especially if you are traveling abroad. Or if your luggage is lost or stolen while traveling, travel insurance can help you to replace your belongings. This can be a huge relief, as it can be difficult to replace important items like passports, medications, and clothing. Or say if your trip is cancelled due to a covered event, such as a natural disaster or a medical emergency, travel insurance can help you to get a refund for your travel expenses. This can be very helpful if you have already paid for your flights, hotels, and other travel arrangements. Travel insurance is a relatively inexpensive way to protect yourself from financial losses while traveling.
So these are some of the common insurances that common people like us need to consider.
But there have been instances when celebrities and sportspersons have had some unique insurance requirements. In past, certain celebrities have insured specific body parts that are vital to their profession or are considered particularly valuable. For instance, famous soccer player Cristiano Ronaldo reportedly insured his legs for a substantial amount of money. Singers and performers with unique or distinctive voices may choose to insure their vocal abilities. For example, singers like Bruce Springsteen and Tom Jones have reportedly insured their voices. Some celebrities are known for their iconic hairstyles, and in some cases, they have insured their locks. For instance, it has been rumored that footballer David Beckham insured his hair for a significant sum. In some cases, celebrities and sportspersons may take out insurance policies to protect themselves from financial losses in the event of concert or tour cancellations, or if they are unable to compete in scheduled events due to injury or illness.
Now coming back to the common people.
I know it seems to be too much to be thinking about all the risks in one got. But let’s not be delusional here. All or any of these risks can become a reality for anyone. And unless you have tons of money stashed up, you will have a tough time dealing with these. There is of course a cost for covering these risks, i.e. premium to be paid. But it’s worth it.
Just imagine yourself and your family in any of the above-discussed situations. How will you cope up with all the expenses, etc.?