Classification of Insurance

classification of insurance

Insurance Protection

Protecting oneself and one’s assets against any loss or damage are the choice of smart people. But with so many types of insurance floating around it seems to be an uphill task. The difficulty lies in understanding which particular insurance suits your needs the most. So let’s make a wise decision by laying emphasis on insurance classification. This will make the task of understanding the options that are available for you and your business pretty simple. Classification of insurance sometimes becomes a thing of concern as there seems to be a difference of opinions. However, herein we shall go by the popular consensus.

Insurance Classification 

To begin with, let me first clarify one very important aspect of insurance. This is in regards to its classification. There are just two broad classifications of insurance under which all the different types of insurance fall. These are:

Life Insurance

 It is that type of insurance in which the insurance company pays out fixed money, in lump sum or installments. This payment is made either to the insured or his beneficiaries. This payment is made or commences either on attainment of specific age or death of the insured. The main feature of life insurance is that premium, of a fixed amount, is paid at regular intervals for a long term. One can say that life insurance is a form of investment. This is because it guarantees a regular income.

Life insurance covers risks arising due to loss of regular income. This can happen at the time of retirement, untimely death and illness arising due to old age. The most popular types of life insurance products are an endowment, life annuity plan, whole life insurance, term policies, unit-linked insurance plans, money back policies etc.

General Insurance

All insurance other than life insurance is covered under the blanket of General Insurance. It is in a true sense a contract of indemnity. Usually, General Insurance is short-term in nature. It covers a period of one year. Premium is paid in one go as a lump sum payment. The most important point to remember is that the payout is limited to the actual loss suffered irrespective of the policy value.

General Insurance covers risks like loss of property. It also covers liabilities that arise from damage to property caused by either you or a third party. Additionally, a catastrophe and death or injury due to an accident also fall under the general insurance cover. The most sought-after products of General Insurance are homeowners insurance, motor vehicle insurance, medical insurance, travel insurance etc.

Summing It Up

So, next time when you are looking for insurance be smart and arm yourself with basic information.  This way you can make an informed decision which comes to your aid in the hour of need. Always remember whenever in doubt it is best to consult a knowledgeable person…in this case a professional. Insurance is a thing of utmost importance as it can give you relief in the future when something untoward happens. A little conscious effort today will make your tomorrow relatively easy to handle.

 

 

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