Types And Classification Of Insurance

Insurance is classified into life insurance and non life insurance. Life insurance aims at providing financial security to the individuals and their dependents. Life insurance deals with the insurance of individuals, groups and pension plans. The risk covered here is death in case of life insurance, sickness and disability in case of health insurance. Annuity, on the other hand provides financial assistance to old persons with no earnings to meet their daily requirements. So, the risk covered here is survival. Non-life insurance refers to the property, liability and miscellaneous insurance.

Types Of Insurance Business

  1. Life
  2. Health
  3. Travel
  4. Motor
  5. Property

1. Life Insurance:

Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured.

2. Health Insurance

The term Health Insurance relates to a type of insurance that essentially covers medical expenses. A health insurance policy like other policies is a contract between an insurer and individual/ group in which the insurer agrees to provide specified health insurance cover at a particular premium subject to terms and conditions specified in the policy.

3. Travel Insurance

Travel Insurance offers insurance protection while on travel. Travel insurance may be called by different names by insurance companies. It is important for a person to check and understand whether the policy covers domestic travel or overseas travel or both. Travel insurance protects self and/ or family against travel related accidents, unexpected medical expenditure during travel, losses such as baggage loss, loss of passport etc. and interruption or delays in flights or delayed arrival of baggage etc.

4. Motor Insurance

Motor insurance gives protection to the vehicle owner against (i) damages to his/ her vehicle and (ii) pays for any Third Party Liability determined as per law against the owner of the vehicle. Third party insurance is a statutory requirement. The owner of the vehicle is legally liable for any injury or damage to third party life or property caused by arising out of the use of the vehicle in a public place. Driving a motor vehicle without insurance in a public place is a punishable offence in terms of the Motor Vehicles Act, 1988.

5. Property Insurance

Insurance of property means insurance of buildings, machinery, stocks etc against Fire and Allied Perils, Burglary Risks and so on. Goods in transit via Sea, Air, Railways, Road and courier can be insured under Marine Cargo Insurance. Hulls of Ship and boats can be insured under Marine Hull Insurance. Further, there are specialised policies available such as Aviation insurance policy for insurance of planes and helicopters. Thus property insurance is a very vast category of General Insurance and the type of cover that a person needs depends upon the type of property a person is seeking to cover.

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