Different Types of Insurance Policies under General & Life in India 2025

Accidents or losses of any kind, including death, are the formidable realities that come uninvited, without a knock on the door, and turn our lives upside down. While there is absolutely nothing that we can do to stop these uncertainties, we can certainly make our lives shockproof.

Insurance is a tool that provides us with much-needed protection from uncertainties. Now, selecting the correct type of insurance with the right amount is one prudent decision we need to make to safeguard our assets or financial stability.

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Table of Content

What is Insurance?
Types of Insurance
Types of General Insurance
Types of Life Insurance
Benefits of Insurance
Frequently Asked Questions

What is Insurance?

Insurance is a legal contract between an insured (individual or entity) and an insurer (insurance company) to get financial coverage in case of damages or losses under specific circumstances.

Throughout the policy period, the insured must pay regular premiums, and the insurer is responsible for providing the financial coverage in case an unfortunate event occurs, like the death of the policyholder or the damage or loss of their insured assets.

Different Types of Insurance Available in India

While there is a wide range of Insurance types available in the market, all of them can be broadly classified into two main categories:

General Insurance
Life Insurance

While Life Insurance provides you with financial coverage against your life, a General Insurance policy indemnifies you against any losses for your non-life assets.

Below is the further classification of the above two types of Insurance:

General Insurance	Life Insurance
Health Insurance	Term Insurance
Motor Insurance	Whole Life Insurance
Travel Insurance	Endowment Policy
Property Insurance	Money Back Policy
Commercial Insurance	Pension Plan
Asset Insurance	Unit Linked Insurance Plans
Pet Insurance	Child Plans
Bite-Sized Insurance	Group Life Insurance
	Group Term Insurance
	Guaranteed Plans

Types of General Insurance in India

Basically, an insurance that does not lie in the ambit of Life Insurance is General Insurance.

General Insurance provides coverage against any financial loss incurred due to any loss or destruction of the insured asset. It safeguards your assets like a Bike, Car, Home, Travel, Health, or even your beloved electronic gadgets from any loss.

1. Health Insurance

A Health Insurance is your savior against the expenses incurred due to any illness or medical emergency.

There are various types of health insurance available based on their coverage:

Individual Health Insurance: Covers one policyholder.
Family Floater Health Insurance: Covers the complete family under a single policy.
Group Health Insurance: Covers the employees of an organization.

These have different products under them based on their usage and many other factors. Here is a list of major types of health insurance products available in India:

2. Motor Insurance

You must have a Motor insurance policy not just because it is mandatory in India but also because the policy ensures that the vehicle has complete protection against physical damage from natural or artificial calamities and third-party liabilities arising from the insured vehicle.

Based on the type of vehicle they cover, Motor Insurance is broadly categorized into:

The different types of Motor Insurance Policies available in the market under the ones mentioned above are as follows:

Third-party insurance Policy: Pays the financial liability to the third party affected in the mishap, ensuring you do not face legal hassle due to the accident.
Comprehensive Insurance Policy: Apart from covering third-party liabilities, these plans also cover the expenses incurred for repairing the damages to the policyholder’s vehicle due to an accident, fire, artificial and natural calamities, riots and other such instances.
Own Damage Policy: With Own Damage Cover, you receive the same benefits as a comprehensive policy without the third-party liability portion of the policy.

Additionally, you can purchase some add-ons like Zero depreciation cover, Loss of personal belongings cover, Pay-as-you-drive cover, Daily conveyance cover, etc. to ensure that you are covered against any eventuality.

3. Travel Insurance

Travel Insurance is your financial safeguard when you are travelling. It covers loss of baggage, loss of passport, hijacking, medical emergencies, delayed flights, accidental deaths, adventure sports etc.

The major types of travel insurance are:

Domestic Travel Insurance: For travel within the country
International Travel Insurance: For travel outside the country
Student Travel Insurance: If you are moving abroad for higher studies.

Under the above types, there are different products like Individual Travel Insurance, Family Travel Insurance, Senior Citizen Travel Insurance, Corporate Travel Insurance, Multi Trip Travel Insurance, Single Trip Travel Insurance, Group Travel Insurance, and Schengen Tourist Insurance.

4. Property Insurance

A Property Insurance Policy provides financial reimbursement to the owner/renter of a building and its contents.

Some products available in the market under property insurance include:

5. Commercial Insurance

A Commercial Lines Insurance policy ensures that the business does not face any financial burden because of any financial and business risks. It provides coverage to business, its employees and ownership.

Furthermore, Commercial Insurance has several Insurance types based on the type of asset covered, viz:

Liability Insurance: Provides coverage against damage to any third party and offers the following types of Policies:
- Directors and Office Liability Insurance
- General Liability Insurance
- Public Liability Insurance
- Cyber Insurance

Marine Cargo Insurance: This Insurance indemnifies the goods/cargo carried through inland transit.
Business Insurance: Business insurance provides coverage for losses related to a company’s core operations like interruption of business operations, product liability, professional liability, etc.
Commercial Property Insurance: Provides financial coverage for damages to a business’s physical assets from theft, vandalism, fire, explosions, storms and burst pipes.
Professional Liability Insurance: Professional liability insurance covers errors in the services that a company provides, including negligence, inaccurate advice, etc.
Umbrella Liability Insurance: Offers additional coverage over the maximum amount offered by a commercial liability insurance policy.

Engineering Insurance: A comprehensive insurance that provides complete protection against all risks associated with engineering and machinery, like the risk faced by the ongoing construction project, installation project and machines and equipment in project operation. It includes the following insurance products:

Workmen Compensation Insurance: Workmen Compensation provides financial coverage to employees who get injured or die in any mishap during work.

Crop Insurance: Crop Insurance covers the financial losses that a bad crop season, crop failure or any other related menace might bring in for the agriculturists.

Apart from the above major categories of General Insurance, there are a few more types as below:

6. Asset Insurance

Asset Insurance provides financial coverage to your assets like Mobile, TV, and other appliances or electronics so that their expensive repair doesn’t hit your pocket.

7. Pet Insurance

Pet Insurance covers your furry baby’s health and well-being requirements, such as any medical condition, such as pregnancy complications, dental treatments, and insect-borne diseases. It also covers a lot of other conditions like pet theft, loss or damages to a third party because of the pet, accidents, overseas coverage and many more, depending on your insurance provider.

8. Bite-Size Insurance

Bite-size Insurance, or small-ticket insurance/sachet insurance is available at very low premiums and focuses on specific needs. More than being a type, it is a category of insurance that is unrestricted across all categories like health, travel, property etc.

A few common Bite-Sized insurance products available in the market are:

Online Fraud Protection
Cab Ride Insurance
Backpack Insurance
Marathon Insurance, and many more.

Types of Life Insurance in India

Life Insurance provides financial coverage for the most uncertain part of human life: Life itself! Thus, it offers financial protection to the Life Assured's family in case of unfortunate events like the death or disability of the policyholder. In addition to the life coverage, some policies also provide a savings component and can be used as a prudent investment option.

Below are the major types of Life Insurance policies in India:

1. Term Insurance

Term Insurance is the most basic type of Life Insurance that provides Life Cover for a predetermined period called the 'term' of the policy.

Since they do not offer any cash value, they are generally available at a much lower premium than other products for the same amount of coverage. If the Life Assured dies during the policy term, the nominee receives the Sum Assured, and there is no maturity value if the Life Assured survives the policy term. However, certain Term Plans offer the option of Return of Premium which is paid to the policyholder if Life Assured survives the policy term.

2. Whole Life Insurance

Also known as Traditional Life Insurance, Whole Life Insurance provides coverage for the policyholder's entire life. Besides this life cover, they also have a savings component and accrue periodic bonuses.

Generally, the Whole Life Insurance Plans have a maturity period of 100 years, and if a policyholder survives this term; they are paid a maturity amount.

3. Endowment Policy

An endowment policy is a perfect mix of Investment and Insurance. It provides Life Coverage and helps build a corpus for major life goals.

A portion of the premium goes towards Sum Assured while the other portion is invested in certain low-risk investments. In case of the policyholder's demise during the policy term, the Sum Assured is paid to the nominee. However, if the policyholder survives the term, they receive a maturity amount along with the accrued bonuses.

Thus, Endowment Plans serve the dual purpose of Insurance and Investment.

4 . Money Back Policy

Money Back Policies are essentially the Endowment Plans only with the additional feature of payments at certain pre-defined intervals during the policy term. Additionally, on maturity, the maturity benefits are paid along with accrued bonuses.

In case of the policyholder’s demise during the term, Sum Assured is paid to the nominee regardless of the survival benefits already paid.

5. Unit Linked Insurance Plans

ULIPs provide Life Coverage and capital-building opportunities by investing in various market-related instruments and funds of varying risks.

ULIPs have some underlying funds related to different asset classes like Equity, Hybrid and Debt funds where a certain portion of the premium is invested as per the policyholder's risk appetite. While this portion of the premium helps generate returns, the other portion goes to the Life Coverage part.

ULIPs are flexible to a certain extent. They allow partial withdrawal after a lock-in period of 5 years and the switching of funds that can help you customize your investment as per your financial goal and life stage.

6. Pension Plan

Also known as Retirement Plan, Pension Plan helps to accumulate wealth for the golden years of one's life and helps you deal with the financial uncertainties of the post-retirement phase.

Thus, a pension plan allows you to contribute a specific portion of your income as a premium during your earning years. Subsequently, in your retirement phase, this accumulated amount is paid back to you in the form of an annuity or pension at regular intervals.

7. Child Plans

These are specially designed endowment plans meant to financially secure a child's future in case any mishap occurs with their parents or, more importantly, the sole earning parent.

In the event of the policyholder's death, the child receives a certain sum assured. However, the policy does not end there. Future premiums are waived off/paid by the insurer, and the child also keeps receiving some amount at regular intervals. This plan ensures the demise of the earning parent does not impact the child's education.

8. Group Life Insurance

A group life insurance policy offers financial coverage to families of the members of a group in case of an unfortunate demise. The entire group gets life insurance coverage under a single policy.

Such plans are usually applicable in case of employer-employee relationships (companies) and non-employer-employee relationships (welfare organisations).

9. Group Term Insurance

A group term insurance policy provides financial coverage to a group of individuals for a specific time period. It is usually provided by employers to employees and is renewable on an annual basis.

In case of the insured employee’s unfortunate demise, the death benefit is provided to the designated beneficiary.

10. Guaranteed Plans

Guaranteed plans provide the benefits of both savings and insurance. They offer a guaranteed return on investment after the policy matures either in the form of a lump sum or regular income over a specific time period.

What’s more, such policies also come with death benefits thus providing financial coverage to the insured individual’s family members in case of the former’s unfortunate demise.

What Are the Benefits of Insurance?

Both general insurance and life insurance come with their unique set of benefits. Scroll down to learn about them in detail:

Benefits of General Insurance

Any individual needs to have a general insurance policy owing to the risks posed by accidents, medical emergencies, natural calamities, and other unforeseen circumstances. The policy provides financial protection in case such situations arise in our lives. We cannot predict an accident or calamity; however, we can be better prepared to handle them.

Here are a few benefits that General Insurance provides:

For most categories, having insurance coverage is compulsory by law. One example is the Motor Vehicles Act 1988, which made motor insurance compulsory. Thus, while following the mandatory regulation, you also ensure your beloved vehicle is financially protected.
General Insurance Plans provide compensation against losses. Thus, across all categories, they serve one primary purpose: to provide financial protection and safeguard your savings in case any unfortunate situation arises.
Many General Insurance Plans provide tax benefits. For example, the premium paid towards medical insurance offers tax benefits under Section 80D of the Income Tax Act.

Benefits of Life Insurance

Life Insurance is basically the Kavach that protects your dependent family if, God forbid, anything happens to you. Here are the most crucial benefits that Life Insurance provides:

The primary and foremost benefit that Life Insurance provides is financial security. It's the cushion that ensures your family's finances remain unaffected even in the case of the breadwinner's demise.
With a Life Insurance Policy, you can also avail of tax benefits. The premium paid towards a Life Insurance Policy is tax-free under section 80C of the IT Act. Also, the returns, be it sum assured, maturity benefit or bonus, are tax-free under Section 10(10)D of the IT Act.
With Life Insurance in place, you can be stress-free about a loan repayment even in case of death. Your insurance will take care of the loan repayment and ensure that your dependent family does not deal with this financial struggle.
Life Insurance is an excellent method to secure your child's future financially. While building a corpus for higher studies, Child Education Plans also ensure that your child's education goals remain unaffected even in case of any unfortunate incident like the death of the earning parent.
Retirement Plans are annuity based and provide you with the option of periodic payments after retirement. Not just that, they also serve the primary purpose of providing life cover and financially securing your dependents.

FAQs about Types of Insurance in India

All

Which type of Insurance is the most important?

It depends on the requirements. There are two types of insurance needs- Long Term and Short Term. Short-term needs are for a year or two, but Long-Term needs can last for a lifetime. All Insurance is essential. The short-term ones, like Car, Property etc., cover our finances for a short time, while others, like Life and Health, are essential for a long tenure and are usually permanent.

What is the key difference between Life Insurance and General Insurance?

The main difference is about the "Principle of Indemnity" that applies to General Insurance but does not apply to Life Insurance. This principle states that the compensation from Insurance cannot exceed the magnitude of Loss. However, the Loss of life in case of death cannot be measured and hence does not come under the Principle of Indemnity.

Where can I get the complete details about my Policy coverage?

To get the correct and complete details about your policy, its benefits, exclusions, and other details, it is recommended to check the policy document and wordings carefully.

What are the characteristics of Insurance?

The characteristics of Insurance are as follows:

A contract
Undertaking of risk
A cooperative device
Payment at Contingency
Premium
Contract of adhesion Protection

What are the 2 basic types of insurance?

General insurance and life insurance are the two basic types of insurance.

What are the types of general insurance?

The various types of general insurance are - health insurance, motor insurance, travel insurance, property insurance, commercial insurance, asset insurance, pet insurance, and bite-sized insurance.

What are the various types of life insurance plans?

The different types of life insurance policies are term insurance, whole life insurance, endowment policy, money-back policy, pension plan, unit-linked insurance plans, and child plans.

Is term life insurance also known as life insurance?

Term life insurance is a type of life insurance that provides a death benefit in case the policyholder dies within the policy period.

What is the importance of insurance?

Insurance enables individuals and entities to protect themselves and their assets from loss and damages due to unforeseen circumstances by gaining financial coverage. For instance, when people buy health insurance, they get financial cover for their medical and surgical expenses.

Is health insurance part of general insurance?

Yes, health insurance comes under the category of general insurance.

Can we take insurance online?

Yes, you can buy insurance online. In fact, it requires zero paperwork and you can get the entire process done within a matter of minutes. What’s more, you can compare the insurance products offered by various providers and choose one that best suits your needs.

What is insurance, in simple words?

Insurance is a legal contract between the insured (policyholder) and the insurer (insurance company) in which the latter provides financial coverage in case of damages or loss to the former’s insured assets under specific circumstances.

Who regulates the insurance companies in India?

The Insurance Regulatory and Development Authority of India (IRDAI) is the entity responsible for regulating insurance companies in India.

What is the most important function of insurance?

The most important function of insurance is that it provides financial coverage to the policyholder in case of damages or loss due to unforeseen circumstances.

What are the various types of insurance available in India?

In India, insurance can be broadly classified into 2 categories - general insurance (including health insurance, vehicle insurance, property insurance, etc.) and life insurance (including term insurance, whole life insurance, endowment policy, etc.).

Should I consider the claim settlement ratio before buying an insurance policy?

Yes, inquiring about the insurer’s claim settlement ratio is a must when buying an insurance policy. It represents the total number of claims settled by the insurance company to the total number of claims raised by customers.

What are the major categories of insurance?

Life insurance and general insurance constitute the two major categories of insurance.

What is included under life insurance?

Life insurance includes term insurance, whole life insurance, endowment policy, money back policy, pension plan, unit-linked insurance plans, and child plans.

What comes under general insurance?

General insurance includes health insurance, motor insurance, travel insurance, property insurance, commercial insurance, asset insurance, pet insurance, and bite-sized insurance.

What is the difference between term life and whole life insurance?

Term insurance policies offer coverage for a specific time period. Meanwhile, whole life insurance offers financial coverage for the policyholder’s entire lifetime and can extend till the age of 99 years.

How to get my policy coverage details?

You can get your policy coverage details on the policy document, which you can download from the insurance company’s official website. Additionally, you will receive a copy of the policy document on your registered email address within 5 to 7 days after you purchase the policy.

What are the benefits of the various life insurance policies offered in India?

The benefits of various life insurance policies are as follows:

Annuity plans offer regular income after retirement.
Term insurance provides coverage for a specific time period at cost-effective rates.
Unit-linked insurance Plans (ULIPs) provide the benefits of both insurance and market-linked investment schemes.
Whole life insurance offers financial coverage for the policyholder’s entire lifetime.
Endowment plans combine insurance with savings, offering a lump sum payment after the policy term.

Can I buy multiple life insurance policies at the same time?

Yes, you can purchase multiple life insurance policies at the same time. However, the total cover must not exceed your Human Life Value (HLV), which can range up to 20 times of your annual take-home salary.

Which is the most popular type of life insurance policy in India?

Term life insurance is one of the most popular life insurance policies in India. The reason is it offers a high sum assured at affordable premiums for a specific time period.

Which type of life insurance policy does not have an expiry date?

Whole life insurance policies do not come with an expiry date. They remain active throughout the policyholder’s lifetime and can extend up to 99 years of age.

What is the best age to avail of life insurance?

Experts recommend opting for life insurance at a young age. This way, you can get lower premiums, as you will be considered a lower risk to the insurance companies, and you can even opt for long-term schemes that can generate a sizable corpus in your later years.

What is the best type of life insurance for a married couple?

Joint life insurance plans are the best for married couples as they offer coverage for both individuals under a single policy. Also, this makes the premium amount much more affordable than purchasing two separate life insurance policies.

What is the best type of life insurance policy for bachelors?

Term life insurance is the best for bachelors as it offers a high sum assured at affordable premiums. However, if they want investment growth or long-term savings, ULIPs or endowment plans can be ideal.

What factors should I consider before buying an insurance plan?

Before buying an insurance plan, consider factors like policy premium, coverage, period, inclusions, exclusions, add-on availability, claim settlement ratio, etc.

What are the 5 major types of insurance schemes?

The 5 major types of insurance plans are life insurance, health insurance, fire insurance, marine insurance, and vehicle insurance.

What is the premium in insurance?

Premium is the amount that policyholders (individuals or entities) pay in order to avail themselves of the financial coverage that comes with an insurance policy.

What types of term life insurance plans are available in the Indian market?

Level term plans, increasing term insurance, decreasing term insurance, term insurance with return of premium, and convertible term plans are the five different types of term insurance plans.