Types of Ordinary Life Assurance

Whole Life Assurance

In whole life assurance, insurance company collects premium from the insured for whole life or till the time of his retirement and pays claim to the family of the insured only after his death.

Endowment Assurance

In case of endowment assurance, the term of policy is defined for a specified period say about 15, 20, 25 or 30 years. The insurance company pays the claim to the family of the assured in the event of his death, within the policy’s period or in an event of the assured surviving the policy’s period. In the event of the insured surviving beyond the coverage/specified period, the maturity value/sum assured along with bonus will be paid to the insured himself.

Assurances for Children

Child’s Deferred Assurance

Under this policy, the insurance company pays the claim to the insured on the maturity date of the policy, which is calculated to coincide either with the date of child’s eighteenth or twenty first birthday or attaining majority. The policy holder may either claim the payment on the date of maturity period or continue the insurance coverage. If the parent dies before the option date, the policy remains continued until the option date without paying premium for the remaining period. Suppose, the child dies before the option date, the parent gets back the premium plus bonus.

School fee policy

School fee policy can be availed by affecting an endowment policy on the life of the parent with the sum assured, payable in installments over the schooling period of their children.

Term Assurance

Term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time in respect of the term offered by the assured. In case, the insured dies during the term, the death benefit will be paid to the beneficiary. If the insured survives after that period expires, either he has to pay additional premium for obtaining further coverage or he has to forgo coverage. It is the least expensive way to purchase a substantial death benefit on a coverage amount over a specific period of time.

Annuities

Annuity is a contract under which the insurer (insurance company) promises to pay the insured a series of payments until the insured’s death. The insured make the premium payment in the mode of either lump sum or installments to the insurer. Generally, life annuity is chosen by a person having surplus wealth and wants to use this money after his retirement. The annuities can be further classified into two types, which are as follows: -

Immediate Annuity: It means that the insured pays a lump sum amount (purchase price) to the insurer and in turn the insurer promises to pay him a specified sum on a monthly/quarterly/half-yearly/yearly basis.

Deferred Annuity: A deferred annuity can be purchased either by way of installments or by paying a single premium. The insured receives the annuity after the deferment period.

Money Back Policy

A money back policy is issued for a particular period, and the sum assured is paid through periodical payments to the insured, spread over this time period. In case of death of the insured within the term of the policy, full sum assured along with bonus accruing on it, is payable by the insurance company to the nominee of the deceased. Generally, Money back policy is preferred by the person, who requires periodical receipts.

General Insurance

General insurance is also known as non-life insurance. It is normally meant for a short-term period of twelve months or less. In recent years, insurance companies are entering the long-term insurance agreements also and the period would not exceed five years. General insurance can be classified into the following categories:

Fire Insurance

Fire insurance provides protection against damage to property caused by accidents due to fire, lightening or explosion. Fire insurance also includes damage caused due to other perils like storm, tempest or flood, burst of pipes, earthquake, riot, civil commotion, malicious damage, explosion, impact (e.g. - aircraft).

Marine Insurance

Hull, cargo and freight are the three basic risk covering area for Marine insurance. Those risks areas are exposed to are collectively known as “Perils of the Sea”. These perils include theft, fire, collision etc.

Marine Cargo: Marine cargo policy provides protection to the goods loaded in a ship against all perils between the departure and arrival to warehouse. Therefore, marine cargo covers carriage of goods by sea as well as transportation of goods by land.

Marine Hull: Marine hull policy provides protection against damage to ship caused due to the perils of the sea. In the event of any loss sustained due to collisions at sea, Marine hull policy covers only 3/4th liability of the hull owner (ship-owner) and the remaining 1/4th of the liability is looked after by associations formed by ship owners for the purpose.

Miscellaneous

Miscellaneous insurance covers all types of general insurance, except the fire and marine insurances. Some of the examples of general insurance are motor insurance, theft insurance, health insurance, personal accident insurance, money insurance, engineering insurance etc.