Insurance is the most ignored aspect of our financial planning. While investments are the kings of our financial plan, insurance is often overlooked by both the investor and financial planner. Some investors don’t understand the importance of insurance, other investors are confused between the various complicated insurance products available in the market.
No individual or business is immune to risks and liabilities. Insuring yourself and your valuables is therefore a wise and necessary decision to safeguard your liabilities in the event of an unpleasant occurrence to you, your assets and business or to the clients who have invested with you.
Today the general insurance stands for a broad spectrum of coverage and is even tailor-made to fit into the specific requirements of the individuals and businesses.
Types of Coverage
General insurance broadly falls under five categories:
* Individual Policies:
The products that come under individual insurance policies are motor insurance, health insurance, travel care policies, personal accident insurances and loan shields. While a motor insurance policy offers a comprehensive protection to your vehicle against accidents, burglary and natural calamities, a travel care policy goes beyond just health insurance, addressing many travel related issues to make your trip stress-free.
Policies such as health insurance and personal accident insurance help you to a certain level in the event of an illness or accident. You can choose from the different plans these policies offer and the coverage you wish. The premium you need to pay is in accordance with these and factors like your age and health history. Premiums paid for health insurance are eligible for tax benefits under 80D.
A loan cover or loan shield offered by different companies is often clubbed with loans as it takes care of that particular loan in case of the demise or permanent disability of the insured. Loss of job of the insured is also taken care for a stipulated time frame.
* Commercial Policies:
Commercial insurance plans such as standard fire and allied perils insurance, burglary insurance, shop owner’s policy, office package policy provide coverage for damages caused by events such as earthquake, fire, storms and burglary in the shops, offices and industrial establishments.
Goods or money in transit can be insured through marine/cargo policies and money insurance policies. A householder’s policy cover your home as well as its contents from both burglary and natural calamities.
Group mediclaim polices are ideal for employers to offer medical benefits to their employees.
* Engineering Policies:
Engineering policies covers machinery break downs or wear and tear that usually happens in manufacturing and industrial units.
* Agricultural Policies:
Agriculture Insurance is a recently developed product addressing the needs of farmers and small scale enterprises. The scope for these products today is spread to a variety of products such as cattle/ livestock insurance, elephant insurance, dog insurance, brackish water insurance, sericulture (silkworm) insurance, horticulture/plantation insurance, kisan agriculture pump set insurance and weather insurance.
* Commercial Liability Policies:
Owning a business holds many responsibilities. Even if you operate with utmost care, errors can happen or clients can perceive you did something wrong. Here comes the need for a liability insurance cover. Commercial liability insurance and product liability insurance protect your business from law suits against third party injury claims, property damages and advertising claims. A professional liability insurance will be useful for service providing professionals, as it would protect them from professional errors, omissions or negligence, whereas fidelity guarantee policies protects an entrepreneur from being victimised due to the fraudulent practices of his employees. The need of insuring the workers in a manufacturing /industrial unit is high, as the business owner is also liable for the injuries / accidents that may happen to them while at work. A Workmen’s Compensation Policy helps to overcome this.
The amount of coverage and the level of risk depend on the nature of each business.The numerous insurance plans could confuse you and make it hard for you to make a choice. Insurance companies offer package policies or template insurance, which is a combination of several products. Package policies are combinations of individual and liability policies.There are also tailor-made policies to fit into the various and specific needs of clients. A good insurance advisor can help you decide on a product for your specific requirements.
(The writer is the CEO of bankbazaar.com)