LL.

B – 4th Sem,
Paper- III(401) :
Unit – I, Part – 10
Date – 3-2-2024

CLASSIFICATION OF INSURANCE POLICIES

Dr. Sudhir Kumar,

Department of Law,
Kurukshetra University, Kurukshetra.
E mail – sudhirvats22@gmail.com

Introduction
In the general course of your financial life, you will end up using different types
of insurance plans. Some of these plans you buy because they are mandatory, others you
will avail of as an employee benefit or other schemes. But, the majority of these various
types of insurance policies help protect your financial status from emergencies.
You can have insurance policies to cover you against expenses of sudden illnesses
and injuries. You can have insurance covering your home or vehicle against damages or
covering you while on a short trip.
Classification of Insurance Policies

An insurance contract works based on certain principles. Based on the applicable

principles the types of insurance in India can be divided into two major categories:
- Life Insurance
- General Insurance
(1) Life Insurance Plans

a) Term life insurance plan

b) Endowment Plan
c) Whole Life Insurance
d) Unit Linked Insurance Plan (ULIP)
e) Child Plan
f) Pension Plans
(2) General or Non-Life Insurance Plans

a) Health Insurance
b) Motor Insurance
c) Home Insurance
d) Fire Insurance

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 e) Freight Insurance
f) Travel Insurance
g) Asset Insurance
Life insurance and general insurance plans have been further classified into
several categories based on the plan’s objective and use.
Classification of Life Insurance
1. Term Life Insurance
Term insurance is the purest and most affordable plan among all life insurance
plans. Term life insurance only offers the risk cover. Thus, the premium cost is
significantly low for a large sum assured.
With a nominal premium amount, you get adequate life cover for your family. If
anything happens to you, your family can still sustain their life and meet life goals.
2. Endowment Plans
Endowment plans are one of the best long-term safe investment plans. With tax-
deductible investment and exempt maturity value, the plan saves your wealth from tax
and inflation.
These plans also offer financial coverage to you against life's uncertainties. If you
survive the policy term, you receive a lump sum amount. If something happens to you
during the policy tenure, the insurance company pays the nominee the sum assured.
3. Whole Life Insurance
Whole life insurance provides you coverage for the entire life and not just for
specific years. Whole life cover can continue until you reach 100 years of age. This
means that your nominees will receive a benefit amount even in the case of your natural
demise.
It also has a savings component to help you accumulate wealth during the policy
term. Whole life insurance is a great way to leave a legacy for your next generations.
4. Unit Linked Insurance Plan (ULIP)
Unit Linked Insurance Plans or ULIPs are life insurance plans which allocate units
against your invested money. You can invest in a mix of debt and equity funds with
ULIPs and avail all the tax benefits.
These plans offer you double benefits - investment options and insurance benefits.
A part of your premium goes towards market-linked equity and debt instruments. The
balance goes towards providing you with life cover during the policy tenure.

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5. Pension or Annuity Plans
Pension or annuity plans are an essential part of your post-retirement life. These
plans help you draw a regular income, i.e., annuity, out of your large retirement corpus.
These insurance plans also provide a cushion for your post-retirement life. You
can invest in pension plans individually or jointly with your spouse. With joint pension
plans, your spouse can be assured of a pension even after your demise.
6. Child Insurance Plans
Child insurance plans are endowment life insurance or ULIP plans with special
features to support your child’s future. You can secure your child's important life goals
like education and marriage by investing in child plans. Child insurance plans come with
insurance and savings benefits.
If something happens to you before the goals, the insurance takes care of your
child's goals. If you continue to live, the savings will grow to fulfil your dreams.
Types of Non-Life/General Insurance Policies
Non-life insurance plans are those which cover any event except the loss of life.
These insurance policies are useful for safeguarding your financial interests in an asset,
your health, and even business inventory. Below are the different types of non-life
insurance plans available to you:
(1) Health Insurance
Health insurance plans cover your emergency medical expenses. Health insurance
plans either reimburse or pay the treatment cost for any illness or injury. Generally, a
health insurance plan will cover the following expenses:
- Hospitalization expenses
- Medical bills pre and post-hospitalization
- Treatment expenses for critical illnesses
- Day care treatment expenses
You can avail of the following types of health insurance plans, depending on your
protection needs:
a) Individual Health Insurance
Provides cover against hospitalisation and day-care expenses for the individual.
b) Group Health Insurance
Health cover for a group of individuals connected due to employment or other
activity except for availing insurance.

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c) Family Floater Health Insurance
Covers one family including spouse, children below the age of 25 years and
parents.
d) Critical Illness Health Insurance
Critical illness health cover offers you a lump sum amount upon diagnosis of a
dangerous illness. The illnesses include cancer, renal failure, heart failure, stroke, etc.
e) Senior Citizen Health Cover
Senior citizen health cover includes features beneficial to the people in their old
age.
f) Personal Accident Insurance
Personal accident insurance provides financial assistance in the case of accidental
injury, disability, and death.
g) Maternity Insurance
Maternity insurance is useful for mothers and a new born child. It covers pre and
post-natal and delivery emergencies.
(2) Motor Insurance
Motor insurance offers your financial assistance in case your vehicle is involved
in an accident. It is mandatory to have motor insurance in India for your bike, car, and
commercial vehicle. You can avail of different types of motor insurance as per your
vehicle and needs:
a) Two Wheeler Insurance
Available for all kinds of motored two-wheeler vehicles, this insurance will cover
against own and third-party damages.
b) Car Insurance
Car insurance is available for passenger vehicles for private or commercial use.
This insurance can cover the driver, passenger and third party along with the car.
c) Commercial Insurance
This insurance applies to the commercial vehicles involved in cargo operations or
plying with a large number of passengers.
d) Fleet Insurance
Fleet insurance is a form of motor insurance covering a large number of vehicles
under the same scheme.

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(3) Home Insurance
Home insurance provides you coverage for the unforeseen damage or loss caused
to the house structure and its content. It provides coverage against human and natural
calamities like fire, earthquake, robbery, burglaries, etc.
Different types of home insurance policies include:
a) Home Structure/Building Insurance
b) Public Liability Coverage
c) Standard Fire and Special Perils Policy
d) Personal Accident
e) Burglary and Theft Insurance
f) Contents Insurance
g) Tenants’ Insurance
h) Landlords’ insurance
(4) Fire Insurance
Fire insurance compensates you for losses incurred due to accidental fire breakout.
Under this insurance plan, the insured (individual or company) receives a significant part
of the damages to the property.
You can avail the following fire insurance policies in India:
a) Valued Fire Insurance
b) Specified Fire Insurance
c) Floating Policy
d) Consequential Fire Policy
e) Replacement Policy
f) Comprehensive Fire Insurance Policy
(5) Freight Insurance
Freight insurance is a policy put in place by a third party that ensures the partial or
total value of your cargo. These policies cover goods and merchandise against loss or
damage during transit from one location to another.
(6) Travel Insurance
Travel insurance provides you financial protection when you are travelling in
India or abroad. It provides coverage that takes care of any issues you may face during a
trip like flight cancellation, loss of passport, loss of baggage, or medical emergencies.
a) Domestic Travel Insurance
Travel insurance for travels within the country

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b) International Travel Insurance
Travel insurance for foreign travels. It may be necessary for travelling to certain
countries and regions.
c) Individual Travel Insurance
Travel insurance you can buy while travelling alone
d) Group Travel Insurance
Available to a group of people travelling together from one destination to another
e) Student Travel Insurance
You should have while you travel to a foreign country for school or university
education
f) Senior Citizen Travel Insurance
Travel insurance with specific features for travellers 60 to 70 years of age
g) Family Travel Insurance
Umbrella insurance to cover your entire family on a trip
(7) Asset Insurance
Asset insurance plans protect your assets like cars, electronic gadgets, jewellery,
etc. Asset insurance generally protects you against theft or damage to a valuable asset.
Other Insurance are Cattle Insurance, Crop Insurance, Burglary Insurance, Pet
Insurance, Bite-Sized Insurance (Online Fraud Protection, Cab Ride Insurance, Backpack
Insurance, Marathon Insurance, and many more.)
Conclusion
Life is full of surprises. While some are exhilarating, others are devastating
emotionally and financially, like a car accident or a kitchen fire. That’s why there are
many types of insurance to help after unexpected disasters.
Insurance is easily one of the most useful investment options available. By
purchasing an insurance policy, you can effectively protect your assets, including your
life and your health.

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