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What is Non-Life Insurance Policy?

dateKnowledge Centre Team dateMarch 29, 2021 views204 Views
Non-Life Insurance Policy | Life Insurance Policy

There is so much you may want to achieve in your life. However, there is nothing in your life that you can say will happen with surety. Also, there are certain things you want that should happen without compromise. For example, you want your children to study in a good college.

Given the life uncertainties and if an unfortunate event happens, your dream may shatter. There is a way to ensure life against uncertainties - by buying a life insurance policy. It gives you comfort and security in life.

Similarly, if you plan an international holiday, you want your luggage to reach its destination. In case it does not, you should get a claim in return. You can make this possible by buying a non-life insurance policy.

Also Read - Whole Life Insurance Policy

Types of Insurance

Based on the above information, you can divide insurance into two categories. The below table will help you understand the difference:

Parameter Life Insurance Non-Life Insurance
Definition In life insurance, you are covered for risks associated with your life. The insurance company promises to pay you a sum assured if an unfortunate event. You protect your valuable things through general insurance. The insurance company compensates you for the damage or loss of the thing insured.
Purpose Life insurance, in general, is considered an investment. General insurance is an indemnity contract where the insurer promises to pay you in case of damage or loss of your property.
Period Long term Short term
Who benefits? The policyholder receives the benefits on maturity. In case of the policyholder's demise, the sum assured is received by the nominee. The benefits go to the policyholder and other people insured under the insurance.
Policy cost The cost of life insurance depends on multiple factors - your current age and the sum insured. The policy costs depend on the value of the insured asset.

When do you Need a Non-Life Insurance Policy?

Also Read - Term Insurance Vs Endowment Plan

Non-life insurance is also known as general insurance, and it covers assets like a vehicle, home, travel, accidents, etc. Life insurance is a must-have for every individual. It protects you and your loved ones in multiple ways. Similarly, non-life insurance is a must depending on your lifestyle. However, health insurance is one non-life insurance everyone must-have.

Let us look at the non-life insurance types to understand the need for it:

Individual Non-Life Insurance Corporate/Group Non-Life Insurance
  • Health Insurance
  • Motor Insurance
  • Home & Home Content Insurance
  • Asset Insurance
  • Marine Insurance
  • Liability Insurance
  • Workmen Compensation Insurance
  • Group Health & Personal Accident Insurance

1. Health Insurance

The cost of major treatment is high in India. In case of a medical emergency, all your savings can dry up quickly. To ensure you don't have to spend all your investment in a medical emergency, you need health insurance.

Reasons to Buy Health Insurance Plan

It is an indemnity plan covering your hospitalization expenses up to the sum assured. You can buy a health insurance policy for yourself or a single policy covering all your family members.

2. Motor Insurance

If you are driving a car or a motorbike, it is mandatory to have motor insurance. It covers your vehicle against damage, theft, accidents, etc. There are two types of motor insurance - third party and comprehensive. Third-party insurance takes care of the damages incurred by the third party in case an accident happens with your vehicle. It won't cover damages to your vehicle.

Comprehensive motor insurance provides your vehicle complete end-to-end protection against damage caused by floods, riots, etc. Also, it gives you the add-on benefit that you can opt for personal accident coverage and third-party liability.

3. Travel Insurance

This is needed when you travel by air, especially abroad. It protects you against losses suffered due to loss of baggage, trip cancellation, and flight delays. Some travel insurances also cover hospitalization charges in case your get hospitalized while travelling.

4. Home Insurance

As the name makes it clear, if you need protection for your home and its belonging, you should opt for home insurance. It gives your cover for the damages suffered due to natural or man-made disasters.

How to File Claims for Non-Life Insurance Policies?

The claim process will depend on the type of non-life claim you make. The process and document required for a health insurance claim are different from a motor claim. Below is how you can file a health-insurance claim:

i. Get all the receipts and bills from the hospital and arrange them properly.
ii. Ask for a claim form from the health insurance company or download it from their website.
iii. You need to submit the original policy document, claim application form, hospital certificate, etc. Check the insurance company site and get the list of all documents required.
iv. Keep the copy of the original documents with you. In case the original documents get misplaced, they will be handy.
v. File the claim online or offline with all the documents.

Things to Consider while Buying Non-Life Insurance Plans

The first thing you should be clear about is the non-life insurance you want to buy and the reason for it. The other important points to consider are:

Sum Insured Check for the insured declared value (for motor insurance) or the sum insured offered. It is the maximum amount you can claim under the insurance plan. Chose an insurance plan offering maximum sum assured with an affordable premium rate.
Premium amount Look at the premium you have to pay (monthly for health insurance or one time for motor) and the corresponding sum assured you are getting.
Benefits Check the various benefits the insurer is giving you under the plan. Some of the benefits you must get are zero paperwork, cashless garages, no pre-policy health check, etc.
Claim settlement ratio and time Check the Incurred Claim Ratio (ICR) of a general insurance company. It will tell you how many claims the company processes for every 100 claims submitted. You should also check the speed at which claims get processed.
Documents Read the policy document and look at the fine prints. If there is any point you don't understand, get it clarified before buying non-life insurance.

Both life and general insurance are needed as they cover all aspects of your life comprehensively. You should evaluate your needs and get the best plan under each category and bring security to your life.

Also Read - Compare Life Insurance Quotes

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

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