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The answer to, “What is insurance coverage?’ is simple. Insurance coverage is your financial safety net. It is the sum that provides financial protection to the insured, or their family in case of adversities, such as death, accident, illness or disability. That said, insurance coverage sets the limit of the financial cover one can avail. One cannot make claims that exceed insurance coverage.
Unlike any asset, insurance doesn’t have a lump-sum cost that an individual has to pay to buy insurance. It is instead the regular premiums that the policyholder has to pay to get insurance in exchange.
In a nutshell, insurance shifts the risk from the individual to the insurer. The insured doesn’t have to worry about the rock-heavy hospital bills and asset-damage. When one is insured, it is the insurer that takes care of the financial burdens.
Now that you know the answer to, “What is Insurance Coverage?”, let’s discuss the types of insurance coverage. To begin with, even when the one goal of insurance is to provide financial protection against unforeseen events, there are types of insurance aimed at offering you the highest protection in different areas.
That said, here are the most common types of insurance coverage:
As the name suggests, life insurance aims to provide your family with a safety net to help them meet their expenses and lead a comfortable lifestyle in your absence. The distinguishing feature of life insurance is that it provides survival benefits. Survival benefits are a combination of sum assured, accrued bonuses, and investment returns. In case, the policyholder survives the policy term, they can get the survival benefit.
This type of insurance has its sub-types as well. These are primarily:
The answer to “What is insurance coverage in health insurance”, is this, it is the cost that protects you from medical and hospitalization costs in the event of unforeseen accidents and illnesses. With hospital bills growing unaffordable every day, health insurance is a must-have to ensure the best medical treatment for yourself or your family and protect yourself from financial catastrophes.
Health insurance works similarly to life insurance. The policyholder must pay premiums regularly in form of health insurance costs. The insurance coverage in this regard is the limit up to which you can make claim. If the treatment costs exceed the health insurance coverage, the policyholder has to pay the remaining amount.
Typically, health insurance lasts 12 months (if it’s short-term health insurance); beyond which it needs to be renewed to retain the benefits.
Health insurance is often topped up with riders. Riders are extra benefits you can get by paying extra premiums. The additional riders range from critical illness rider, accidental rider, maternity cover, ICU room rent, etc. that provide you extra financial protection.
While all other types of insurance are a choice, motor insurance is mandatory. Motor insurance provides monetary coverage against theft and damage caused to vehicles (own or third-party) due to accidents and fire, depending on the chosen policy.
That said, there are three types of motor insurance policies:
The fourth type of insurance coverage is property insurance that provides a financial net for immovable items, i.e., properties such as homes, shops, buildings, and offices. This type of insurance protects against damage caused by fire, theft and natural catastrophes.
Now that we know what insurance coverage is, and the types of insurance coverage, we might as well understand how to pick the right coverage. Picking the right coverage is imperative. You wouldn’t want to settle for an inadequate amount that would fail to offer you the required financial net. At the same time, you wouldn’t want to pick an insurance policy that provides adequate coverage but comes with unaffordable premiums.
The right approach here would be to find a balance. Here’s how you can find the right coverage for yourself:
Doesn’t matter what type of insurance you choose; the insurance coverage should be according to your requirements. So, predict your future expenses and identify your requirements accordingly.
This step is of utmost importance especially if you are buying life insurance. The amount you choose should be adequate to match the needs of your family when you’re gone. Projecting a figure after analyzing your annual expenses, purchasing habits can help you calculate a rough figure.
The funds you have will lose value in the future. The object you buy for INR 100 would cost INR 1000 in future. So, it is highly advisable to take inflation and medical emergencies into account while computing your required coverage.
While almost all insurance companies would offer you similar insurance coverage, they would offer you different benefits. So, go for an insurance company that provides you insurance coverage with maximum benefits. That said, make a decision only after comparing quotes online to find the right coverage and benefits for you.
As the importance of protection and life cover benefits becomes clearer among a larger proportion of Indians, the Knowledge Index about life insurance and its ownership all over India is rising. This was witnessed in the Max Life IPQ 6.0 survey conducted jointly by Max Life and Kantar. The recent survey recorded a Knowledge Index score of 61 (compared to 57 in IPQ 5.0) and Life Insurance ownership score of 75% (compared to 73% in IPQ 5.0). This increase of both these metrics is a positive development among Indians seeking protection.
Every type of insurance coverage comes with limitations and terms condition. Everything that one might think is included, may not be. So, here’s a mini guide that can brief you about the inclusions in each type of insurance coverage:
Life Insurance Coverage - Natural deaths caused due to natural illnesses and accidents are covered in life insurance policies.[1]
Health Insurance Coverage: The following are covered under a health insurance policy: [2]
Apart from that, there may be co-payment and sub-limit clauses in your health insurance policy. These clauses impose a limit on the amount the insurer pays while settling claims.
Motor Insurance: The type of motor insurance policy you have opted for determines what’s included in your policy. For instance: if you choose Third Party Liability Motor Insurance, motor insurance would cover the third-party vehicle, but it won’t cover your vehicle.
Apart from that, motor insurance covers the following: [3]
Property Insurance: Property Insurance covers against damage caused by fire, theft and natural catastrophes to immovable properties. [4]
Even though all natural deaths are covered in a life insurance policy. But deaths caused due to suicide, HIV Aids, intoxication and drugs, are not covered in life insurance. [5]
A health insurance policy doesn’t cover the treatment costs of any pre-existing diseases. Currently, pre-existing diseases (PEDs) are defined as conditions with signs or symptoms for which medical advice or treatment has been received. Diseases that are not defined in a health insurance policy are also not covered by health insurance companies. [6]
The following is not covered in a motor insurance policy:[3]
The following is not covered in a motor insurance policy:[3]
ARN NO: Mar22/Bg/25
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