What is General Insurance?

March 08, 2024

Registrationwala

Life is unpredictable. We are all uncertain about what can happen the next moment. This is why, for leading an almost risk-free life, the most practical option for an individual would be to get insurance from an insurance company. Insuring anything except human life is known as general insurance. It helps us to protect our most valued assets such as a car, house, company, gold and other similar valuable assets.

How does General Insurance differ from Life Insurance?

General insurance differs a lot from life insurance. While life insurance is a long-term policy, general insurance is renewed every year. All the risks which are not a part of the life insurance policy’s coverage are covered in the general insurance policy.

General insurance is a contract between the company and the policyholder, wherein the company provides the policyholder with a particular amount as promised. Personal insurance like accidents, liability insurance which includes all the legal liabilities, property insurance against burglary or fire, and health insurance come under the umbrella of general insurance.

Here is a table of comparison between the General Insurance and Life Insurance:

General Insurance	Life Insurance
It covers non-life assets	It covers life of an individual
It is not a type of savings	This insurance helps you accumulate savings for future
Annual contract which comes with a lump sum premium	Long-term contract which comes with the option of installment premiums
It pays sum assured in case of an eventuality, such as robbery or accident	It pays sum assured to the nominee in case of the demise of the policyholder

The Necessity of having General Insurance

Many people may not realize how necessary it is to have general insurance since they are oblivious to the concept of it. Some reasons why the general insurance sector is necessary are mentioned below:

For protection from financial losses
For ensuring your health as well as your dependent(s)
For safeguarding your family in unfortunate circumstances
It saves you from mental pressure
It helps you to live a stress-free life

Different Types of General Insurance

After having understood what general insurance is, it is essential to know the different kinds of general insurances offered in India and when you might want to consider them. The different kinds of general insurance are mentioned below:

Health Insurance

In this type of general insurance, the policyholder gets protection from heavy medical expenses in times of emergency. It is really important to have health insurance because of the sedentary lifestyle.

Policies related to mediclaim provide individuals with hospitalized expenses. Some policies may even pay for the screening tests and diagnosis which are incurred before a medical treatment. Most health policies also include maternity cover. The health insurance policies can not only provide comprehensive protection for you but also covers the hospitalization expenses of all the eligible family members.

Travel Insurance

This type of insurance is usually needed for international travel. It is generally mandatory for getting visas to many countries such as Cuba, Mexico and Turkey. In case there is a medical emergency in the country you’ve traveled to, the medical expenses will be covered by the insurance company you’ve taken the travel insurance policy from.

Most of the insurers provide a list of hospitals around the world where the person can opt for cashless treatment. Travel Insurance or Overseas Medical or Visitor Insurance is a special kind of facility offered by insurance companies in India for providing coverage against unfortunate circumstances which are unforeseen while you travel abroad.

Under the travel insurance, the expenses of the following things are covered:

Loss of passport and baggage
Personal accident
Cancellation of the trip
Risks while visiting foreign countries
Delay in trip

Home Insurance

This type of insurance covers the biggest asset of an individual’s life - their home. Home insurance is a backbone which protects against damages related to the house due to natural disasters such as earthquake and flood. It also covers damages related to theft, burglary, terrorism, etc. This kind of insurance may also pay for the construction cost. However, it does not include coverage of the land’s cost upon which the house is getting built.

Motor Insurane

This kind of insurance covers all types of vehicles including cars, motorcycles, jeeps and commercial vehicles. It provides financial coverage against damage or loss to your vehicle caused due to fire, natural disasters, theft, burglary, etc.

There are three different categories under motor insurance namely:

Two-wheeler Insurance
Insurance for commercial vehicle
Car Insurance.

Benefits of General Insurance

A life insurance policy covers the expenses of an individual’s family when he is not around. But a general insurance policy is meant for an individual to lead a risk free life. The general insurance has a lot of benefits:

It covers the expenses of a car accident
It covers up the hospital expenses
It secures your assets
It offers comprehensive protection and health related expenses
It covers travel expenses and any medical emergencies during travel

Conclusion

Unfortunate circumstances can knock on your door anytime and put you in mental as well as financial stress. This is why it is quintessential to consider general insurance. You can choose one or more than one general insurance policy which can help you and your dependents with financial assistance in the insured tough times of your life. Customers should only get insurance policies from companies with an IRDA insurance license. If you have any queries or need assistance regarding insurance policies, connect with Registrationwala now!

Frequently Asked Questions (FAQs)

Q1. What are the two basic categories of Insurance?

A. Life Insurance and General Insurance.

Q2. When should an individual opt for a Health Insurance Plan?

A. A Health Insurance plan should be opted by every individual because medical emergencies can occur at any point in life and one must be well prepared for it. A health insurance plan will help to meet the costs related to medical emergencies. Ideally, you can opt for this insurance when you have your first stable job so that you can promptly pay your due premiums and enjoy the medical cover’s benefits.

Q3. What incidents are insured by a Travel Insurance Policy?

A. A Travel Insurance Policy covers different insurable events. The list of the exact events which it covers varies from one policy to another. But here is a list of the incidents which you can expect such policy to typically cover: (i) Coverage in case of Personal Accident (ii) Coverage of medical expenses in case of Hospitalization (iii) Loss of Passport (iv) Loss/Damage to Baggage and (v) Delay/Cancellation in Trips.

Some travel insurance policies contain clauses which mention how some events like accidents in adventure sports may not be covered. It is crucial to read all the terms and conditions of a travel insurance policy carefully before finalizing.

Q4. Does having a Health Insurance Policy have any Tax Benefits?

A. Yes, tax benefits apply in case an individual has a health insurance policy. Section 80D of the Income Tax Act, 1961 permits the payment of premium towards Health Insurance plans to be deducted from the Assessee’s total income. This leads to reduction in total taxable income which reduces the tax burden. The deduction limit depends on who the policy is purchased for, whether it is for oneself, family or the parents, the policy purchaser’s age and parents’ age. Senior citizens are eligible for higher limits deduction.

Q5. Who is eligible for purchasing a General Insurance policy?

A. There are different types of general insurance and the eligibility criteria differs for each type. A health insurance policy might have an age limit and require the individual to go for medical tests/examinations. In case of travel insurance, the nature of travel whether it’s national or international decides the eligibility criteria. You can seek help from an insurance agent to know more about specifications of an insurance company’s general insurance policy.