Types of Insurance - Meaning, and FAQs
Insurance is financial protection in exchange for premium payment. There are various types available. Find the all Types of Insurance details Here!
Izhar Ahmad21 Dec, 2023
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Types of Insurance: Insurance plans can protect against many uncertainties in life. For example, life, fire, and marine insurance are just a few of the many types of insurance available on the market. You can lower the costs of getting sick by getting health insurance, and accident insurance can cover accidents.
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Insurance Meaning
A person who buys insurance generally agrees with a bank or insurance provider that the company would pay out a particular amount in case of crises or huge financial needs. Conversely, you agree to pay the company a monthly payment. The amount will depend on the offer you pick and your demands. This setup helps banks gain money from those who join the insurance plan, and in return, they honour their financial obligations to people who need insurance. Life, marine, and fire insurance are common methods for individuals and property owners to protect themselves.Types of Insurance
There are many insurance policies available in the market due to the presence of a large number of insurance companies. However, in this article, we will only be discussing the types of insurance that are prescribed in the Business Studies syllabus for CBSE Class 11 . The two types of insurance that we will be discussing are: 1. Life Insurance 2. General Insurance (which includes fire insurance, health insurance and marine insurance) Let us now discuss each of these types in detail.Life Insurance
It's a kind of insurance in which the insurance company is responsible for ensuring the person's life in exchange for a premium payable at either monthly, quarterly or annual intervals. A life insurance policy, viewed as a protection from the joys and sorrows of life, is actually nothing but a contract. Under that structure, the insurance company undertakes to pay out to the insured a certain amount if the insured dies or at the end of the policy term. For example, people must provide specific facts, including age, medical history, and any behaviour related to smoking or drinking, to obtain a life insurance policy.Fire Insurance
Fire insurance is a form of general insurance that provides coverage for damages resulting from accidental fires within the specified timeframe outlined in the insurance policy. The insurer pays a share of the costs of the damage inflicted on the insured. Ordinarily, a fire insurance policy remains in effect for one year and then may be extended one year at a time, by paying premiums, which are generally payable one sum or in installments. To file a claim for fire loss, there must be a requirement that the loss is genuine and that the fire is not deliberate but accidental.Marine Insurance
Marine insurance is primarily designed for maritime transportation and shipping enterprises, extending coverage to both ships and the goods they transport. It safeguards against potential damages a ship or its cargo sustained throughout the journey, from commencement to conclusion. Under the insurance agreement, various financial losses are included. This includes losses arising from natural disasters like storms or hurricanes and losses resulting from theft, piracy, or accidents occurring on the ship's deck.Also Read- What is Commerce? Meaning, Types, Examples
Some Other Types of Insurance
Numerous other insurance types exist, and a few are outlined below:- Health insurance: A contract between an insurance company and a person or group protects against rising health care costs. The insurance company promises to pay for certain illnesses for the covered person or people.
- Motor Vehicle Insurance: A lot of people who own cars choose this type of insurance because it lets the insurance company pay people who were hurt by negligent driving.
- Cattle Insurance: In this form of insurance, the owner of the cattle gets paid in the event of the animal’s death due to accidents, diseases, or during pregnancy.
- Crop Insurance: Designed to provide cash help to farmers in case of crop failure due to drought or flood, crop insurance works as a binding plan.
- Burglary Insurance: Falling under property insurance, burglary insurance ensures compensation to the covered in the event of burglary, covering losses of goods and damages to home items and personal belongings resulting from burglary, robbery, or theft.
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Difference Between Types of Insurance
| Particulars | Life Insurance | Fire Insurance | Marine Insurance |
| Subject Matter | Focuses on human life. | Concerns assets or physical property. | Involves freight, cargo, or a ship. |
| Risk | Inherent risk; payment at maturity or policyholder's death. | No guarantee of risk; the property may not catch fire. | Unpredictable event occurrence; risk may or may not arise. |
| Time Frame | Typically long-term (more than 5 years). | Usually short-term (one year). | Short-term, covering one voyage or a mix of both. |
| Insurable Interest | Required at the time of purchasing. | Must exist at both purchase and loss times. | Must exist at the time of loss. |
| Payment of Premium | Paid in installments. | One-time purchase. | Lump sum payment. |
| Indemnity Agreement | Not a contract; payment on maturity or after a specific event. | Indemnity contract; covers actual loss in fire incidents. | An indemnity contract; allows claiming market value of the ship and destroyed goods. |
| Loss Measurement | Loss of a human being cannot be measured. | Measurable loss in fire incidents. | Measurable loss in marine incidents. |
| Goal | Aims to provide a safety net and serve as a wise investment. | Aims to provide security to the insured property. | Aims to protect one's belongings during transportation. |
Types of Insurance FAQs
What is fire life insurance?
Fire insurance is a sort of property insurance that covers fire-related losses or damages.
What exactly is marine life insurance?
Marine insurance protects against natural disasters such as earthquakes and lightning strikes.
What are the three most common types of marine insurance?
Marine protection is divided into three types. Freight insurance, ship or hull insurance, and cargo protection.
What is the scope and significance of fire insurance?
Fire insurance covers more than simply accidental fires; it also covers losses caused by lightning strikes, explosions, and other fire-related occurrences.
What is double insurance?
The process of obtaining insurance on the same subject matter with more than one insurer or with the same insurer under various policies is referred to as double insurance.
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