An insurance policy covers the policyholder against a financial loss caused due to specific contingencies. Though there are many types of insurance policies, it is important to know about some basic policies that one must have.

Term life insurance

This policy covers against the death of the insured. A person who has dependants should have a term life insurance. Signing up for a term plan at an early age, makes the person pay a lower premium over the term. Term plans inherently have lower premiums as compared to endowment plans or Ulips. Depending upon the age of applicant, one may have to go for a health checkup before the policy is issued. One can purchase a term plan through an insurance adviser or online using insurance aggregator platforms.

Health insurance

This cover provides reimbursement of various medical expenses. There are a a host of tailor-made health plans for senior citizens, people with certain pre-existing diseases, students, families etc. One needs to choose a plan that suits their medical needs. Many times an employer provides health insurance cover to the employee and his family. In such a scenario, it is important to know the amount of cover and if less, one can take a top- up health insurance plan to fi ll the gap.

Automobile insurance

It is mandatory for vehicle owners in India to have a third party liability cover for all their vehicles. While the premium for third party liability cover is very low, it will only cover the damages payable to a third person who is injured in an accident of the vehicle. To be able to cover other expenses related to personal injury for repair of the car damaged, one can go for a comprehensive insurance cover.

Points to note

  • It is important to weigh the benefits, riders, premia, claim settlement ratio, company background before choosing the right insurance policy for yourself.
  • Insurance plans bought online typically have a lower premium as compared to those bought offline.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

Read more: EconomicTimes


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