In the simplest terms, insurance is a precautionary act that protects you from a massive financial loss for a set period. You can consider insurance to be one of the primary means of risk-management for a business, person or an asset. The person/company that offers the insurance is called the insurer and the person/company who buys the insurance is called the policyholder.
To buy the insurance, the policyholder needs to pay a small amount of money to the insurer on a regular basis for a fixed amount of time. This amount paid is known as the premium for the insurance.On payment of the premium amount on a regular basis, the insurer guarantee’s the insured article’s safety and takes complete care of the financial losses incurred to the policyholder in case the article is damaged, lost, stolen, etc. (as specified in the insurance policy terms).
Before starting the payment of the premium, the policyholder and the insurer sit together to craft a legal agreement which entitles the policyholder to ask for money from the insurer in case he/she faces a financial loss (usually via damage or theft) over the insured item. This legal document clearly outlines the conditions in which the policyholder can ask the insurer for help in covering the financial losses.
The main benefit of getting an insurance is that the policyholder gets a complete or partial cover for the financial losses occurred over the insured item by paying a small safety fee. The safety fee here stands for premium. Let us understand the concept of insurance with a small example: A person pays a premium of 1,500 Rs. every month to avail a health insurance worth 25 Lakh Rs. In such a scenario, the person is eligible to ask the company to cover all his/her medical expenses (as covered in the policy agreement) for a sum of up to 25 Lakh Rs.
There are several companies in and out of India that offer a variety of insurance plans to its customers. Some of the best insurance plans in the country are mentioned below.
Best Insurance Plans in India
- SBI Life eShield:The SBI Life eShield is a type of life insurance plan offered by one of the biggest banks in India. The life insurance plan is categorized into 4 different categories namely, level cover, level cover with anaccidental death benefit, increasing cover as well as increasing cover with anaccidental death benefit. The policyholder’s relatives can claim the insurance amount from the bank incase of an untimely demise of the policyholder.
- Kotak Life Preferred e-Term: The Kotak Life Preferred e-Term plan is again a type of life insurance provided by the Kotak Mahindra bank in India. It offers the benefits to the relatives of the policyholder in case of his/her untimely demise. The plan does not offer the entire insurance sum at a single go, instead, it makes a fixed monthly/annual payment for up to the next 15 years.
- LIC e-Term Plan: LIC is an Indian government institute that offers insurance to its clients. The LIC e-Term plan is a life insurance plan available for purchase online. The premium of the LIC e-Term plan is slightly higher compared to the other private insurance companies in India.
- Bajaj Allianz eTouch Online Term: This life insurance plan does not cover the costs of the accidental total permanent disability for life of the policyholder. However, it features one of the smallest premium amounts compared to the other insurers in India.
- HDFC Life Click2Protect Plus: The HDFC Life Click2Protect Plus is one of the most premium insurance plans in India. It features the second highest settlement ratio of over 95% in the most recent cases. This premium plan covers all the major and minor costs incurred by the policyholder during the term.
- ICICI Prudential Wealth Builder 2: This insurance plan features the highest settlement ratio of 96.2%. This plan features competitive pricing in the premium amounts as well as provides a cover in case the policyholder suffers from a disability after an accident without any added costs to the premium amount.
- LIC New JeevanAnand: The LIC New Jeevan Anand is one of the most popular life insurance plans in India since it offers no maximum limit on the insurance amount. The policy features a minimum 1 Lakh Rs. payment and has no upper limit. This endowment plan takes care of the policyholder’s family’s needs in case of his/her early demise/disability.
- PNB MetLife Mera Term Plan: The PNB MetLife is one of the premium insurance plans since it features a very high minimum sum assured limit of 10 Lakh Rs. The premium for this insurance is higher compared to the other insurance policies on this list.
- Bajaj Allianz Cash Secure: The Bajaj Allianz cash secure is one of the life insurance policies that offer a very small period of policy min-max term. While other insurers usually offer the min-max policy term for nearly 30-40 years, this insurance policy offers its benefits in a period of 15-17 years thereby making it a perfect choice for people in their old age.
- SBI Life Saral Pension: Unlike other life insurance plans this SBI Life Saral Pension is a pension plan that reaps its benefits to the users in form of a pension in case he/she lives through the period of insurance. The Saral Pension plan helps the policyholder save for his/her retirement while providing a good risk-management plan.
Insurance Policy Types
There are over 50 different types of insurance plans currently available in India. Some of these types are mentioned here.
- Vehicle Insurance: The vehicle insurance covers the loss incurred via the damages or theft of your vehicle. It is easier to get a vehicle insurance for a new vehicle compared to an old one. The bank/insurance company often carries out a comprehensive introspection of the second-hand (used) vehicle before granting an insurance policy for it. The premium for a new vehicle is usually less compared to the premium for a used vehicle. The premium amount also increases for a luxury vehicle with high parts replacement cost.
- Home Insurance: Home insurance covers the damages incurred to your house in case of a robbery or a calamity. Some home insurance policies cover more instances of a natural calamity than others. You must strategically choose the type of home insurance and the added benefits depending on the location of your house. The home insurance is usually costlier compared to a vehicle or health insurance.
- Life Insurance: Life insurance is one of the most commonly availed insurance types by people all over the world. This insurance helps the policyholder to take care of family’s needs in case of his/her early demise. Most of the Indian insurance companies offer competitive pricing on life insurance since it is one of the best-sellers for the companies.
- Health Insurance: The health insurance helps the policyholder cover his/her medical expenses in case of an accident or terminal illness. The insurance companies often ask for a comprehensive health report for an individual before providing a health insurance to him/her. The health insurance premium is usually higher for elder people compared to people in their mid-20s and 30s.
- Property Insurance: The property insurance works just like your home insurance. However, it is used to secure an asset rather than your own home. The asset may include another house or a shop that you own.
- Travel Insurance: The travel insurance covers all your expenses in case of loss/theft of your luggage while you are on a journey. The travel insurance is usually available at a very small cost and is often calculated over the total trip of your cost. The amount paid back on claiming the insurance is often limited to a few thousand to a few lakh rupees depending on the type of travel insurance purchased.
- Cyber-Insurance: The cyber-insurance protects the financial losses occurred in the case of a hack/online threat. This insurance is often helpful for large companies that operate over the internet to carry out the day to day business and client handling. Cyber-insurance also protects your online assets/currency in case it is stolen/lost to a malware function.
- Pet Insurance: As the name suggests, the pet insurance is used to secure the health of your pet. The insurance company often asks for a complete health check-up for your pet via a qualified veterinarian before granting a pet insurance. The pet insurance covers all the medical expenses for the treatment of your pet in case it suffers from an illness/disease.
- Mortgage Insurance: The mortgage insurance works for insuring the mortgage loan for a person to a bank. It is advisable to take the mortgage insurance from the same bank from which you take the mortgage loan for your new house. You might require a mortgage insurance from the bank in case your total equity in the house is lesser than 20% of the total value of the house.
- Self-Insurance: The self-insurance is another one of the most popular insurance plans taken up by individuals around the world. This insurance is carried out by the person itself to avoid the lapse of his/her insurance policy with the bank. The person carries out this policy when his/her health is not at a high financial-risk jeopardy.
Insurance Policy Companies in India
Here are a few companies in India that offer various types of insurance to its clients. These are the best insurance companies classified according to the highest settlement ratio. Most of the mentioned companies feature a 90% or high settlement ratio thereby allowing you to safely insure your property/asset.
- Life Insurance Corporation of India
- HDFC Standard Life Insurance
- New India Assurance
- ICICI Prudential Life Insurance
- Tata AIG General Insurance
- Birla Sun Life Insurance
- IFFCO TOKIO General Insurance
- Canara HSBC OBC Life Insurance
- Max NewYork Life Insurance
- Reliance Life Insurance
It is crucial that one reads the fine print of an insurance document before applying for a policy to know exactly what aspects of the asset are covered under the umbrella of the insurance. It is advisable that one takes the help of a reliable insurance agent/bank to make sure that the entire application and reimbursement process goes smoothly.