There’s no doubt that the number and types of insurance policies available in the market are pretty much borderline overwhelming. But, opting for an insurance policy for every genre can drain unnecessary expenses and you might end up paying much more than what’s necessary. Hence, it is essential to know the 5 must-have insurance policies to ease financial planning.
Take a look!
What are the 5 Essential Insurance Policies that Everyone Must Have?
The 5 different types of insurance policies that are beneficial for every individual are:
1. Health Insurance
What is it?
A health insurance policy, also known as a medical insurance plan, is a type of general insurance that covers medical expenses arising from injury, accident or illness. So, if an individual buys such a policy and the insured meets with any misfortune covered within the insurance policy, the insurer is liable to pay for medical expenses covered under that policy.
What does it cover?
A health insurance policy covers most necessary medical costs. Although every insurance plan has its own terms and conditions, some of the commonly available coverages are related to hospitalisation expenses, pre-and post-hospitalisation charges, ICU room charges, complementary health check-ups and others.
Thus, in case of medical emergencies, a well-rounded health insurance plan can significantly cease the monetary drainage for the policyholder. It is true that individuals of every age must opt for a health insurance plan to cover the expenses for medical needs. However, young individuals can also have several added advantages such as lower premiums, tax benefits, no-claim bonuses and others on their health insurance policy. That said, it is crucial for older individuals to opt for a health insurance policy as they are more likely to need coverage for health-related costs.
Read more: Best Car Insurance In India | Top 5 Car Insurance Company In India
2. Car Insurance
What is it?
A car insurance policy protects you and your vehicle from damages and risks caused due to theft, natural disasters, fire, accidents and others. Apart from it, you will also be protected from financial liabilities due to third-party damages. As a result, you will remain financially secure in case of losses caused due to unforeseen events.
What does it cover?
In India, it is mandatory for car owners to have at least a third-party insurance plan that offers protection against financial liabilities arising out of damages caused to a third-party person, vehicle or property. On the other hand, a comprehensive car insurance plan offers coverage to both third-party and own-car damages. Besides, you can also enhance protection by customising your comprehensive car insurance plan with the necessary add-on covers.
According to the Motor Vehicles Act, driving without a valid car insurance policy will lead to a fine of Rs. 2000 for the first offence, and Rs. 4000 for the second offence. Also, a defaulter might get imprisoned for up to 3 months for the second offence. Thus, every car owner must opt for a proper motor insurance plan based on the requirements and level of protection.
3. Bike Insurance
What is it?
Bike insurance, also known as two-wheeler insurance, is a must for individuals owning a two-wheeler. Such a policy covers the bike owner and the two-wheeler from financial losses in case of damages due to accidents, theft, natural disasters and fire, besides covering third-party liabilities.
What does it cover?
Depending on the level of protection, individuals can opt for a comprehensive bike insurance plan, a standalone third-party insurance plan or an own damage bike insurance plan. While third-party bike insurance covers only third party liabilities, a comprehensive bike insurance plan covers both third party and own bike damages. On the other hand, a standalone own damage bike insurance plan covers only own damages, and this policy needs to be bought together with a third-party plan.
Driving a two-wheeler without a bike insurance plan is a punishable offence in India. Thus, individuals owning a two-wheeler must consider a bike insurance plan as this will shield your two-wheeler against misfortunes and paying penalties.
Read more: Why Is Car Insurance So Expensive For New Drivers | Why Insurance Is Expensive For Young Drivers?
4. Life Insurance
What is it?
A life insurance policy is an agreement between the policyholder and an insurer, wherein the policyholder pays premiums in exchange for a lump sum known as a death benefit that goes to the beneficiaries after the death of the policyholder.
What does it cover?
After the demise of the policyholder, the family members of the beneficiaries can get certain monetary compensation. Apart from it, a life insurance plan might also cover costs associated with a death, such as a mortuary fee, burial, etc.
Hence, if you are the only bread earner of your family, a life insurance plan will pay off a substantial amount of money after your death and help cover all immediate expenses after your demise. The payouts from the life insurance plan will also ensure that your family remains financially stable and their everyday life does not get disrupted.
Read more: Best Car Insurance In India | Top 5 Car Insurance Company In India
5. Homeowner’s or Renter’s Insurance
What is it?
If you have your own house, a homeowner’s or renter’s insurance plan is one of the most important insurance policies to buy. Such a policy will help secure a house against misfortunes and thus will halt monetary expenses against it.
What does it cover?
The homeowner’s insurance covers a house from theft or damage or similar mishaps such as damage to a visitor’s property or costs associated if someone gets injured at your property. However, individuals must note that coverage depends on an insurer, and a potential insurer must check every term and condition before buying a plan. Also, if you need coverage against earthquakes, fires, flooding, etc., you might need to opt for additional insurance covers.
Hence, before buying any insurance policy like a health insurance policy or a life insurance policy, one must check the cost and coverage of a plan. This will help them claim the correct insurance amount and save against rejection. Apart from these, an insurance policy will help to cease the unnecessary cash outflow during unfortunate mishaps.