Life is full of risks and unpredictable events and it is important to duly
safeguard yourself from these happenings which could cost you heavily both
financially and mentally. Thus, insurance plays a vital role. Insurance is a
form of contract which works on the principle of indemnity where one party seeks
financial protection or reimbursement from another party known as an insurer on
the happening of certain events which leads to loss of life or damage to a
certain commodity on which the insurance has been provided.
In other words, insurance is nothing but an assurance that the insurer provides
to the policyholder that when a certain loss or damage would occur to a
policyholder or an object then the insurer would provide a certain amount to the
policyholder or a nominee in case of life insurance, in return for an annual
premium provided by the insured policyholder to the insurer.
The insurer provides economic support when the insured deals with the damage or
a loss. For this purpose, a value is assigned to a property so that when the
property deals the damage the insurer could provide reimbursement to it based on
its value which in case of no insurance could be irreparable to the owner of
Insurance companies are generally the insurer here. These companies provide
insurance on different tangible and intangible products known as insurance
products. Insurance products in other words are nothing but insurance policies
provided by an insurance company on different types of insurance such as life
insurance, fire insurance, motor insurance, aviation insurance, health
Types Of Insurance Products?
As discussed in the previous section insurance products are the policies
provided by the insurer to the insured policyholder on different types of
insurances. Before understanding what all insurance products are generally
provided by the insurer to the insured, it is important to know about insurance
Some of them are discussed below:
Life Insurance:Under life insurance, the life of the policyholder or the life of some other
person is insured by the insurance company, in other words when the policyholder
or the person for whom the insurance has been taken dies then the company pays a
certain amount to the nominee which is generally a family member of the
policyholder. In some cases, the policyholder and the person whose life is
insured could be the same as in those cases policyholder's life would be insured
whereas in other cases the policyholder and the person whose life is insured
could be different, here the nominee would be the policyholder himself and the
amount payable on the death of the person whose life is insured goes to the
policyholder. Whereas in other cases where the policyholder is the one whose
life has been insured then the company pays the amount to the nominee which
generally is a family member as discussed above.
Health Insurance:As the name suggests, health insurance is an insurance that covers the
reimbursement of the medical expenses incurred by the insured after a certain
medical condition which includes different medical expenses such as
hospitalization, surgery, healthcare, and recently the areas as to what this
insurance constitutes has been widening and has also started including dental
care, mental illness, and so on.
Generally, the insurer estimates the premium and payroll tax through an analysis
of the health condition, the system, various expenses over the risk pool, and
then the agreement is formed with certain benefits provided to the insured.
General Insurance:As mentioned previously in this article there are different types of insurance
such as life, health, fire, motor, aviation, etc. General insurances in India
include a vast list of insurances varying from marine to miscellaneous
insurances. Some of the important insurances that come under the ambit of
general insurance are listed below:
- Travel insurance
- Motor insurance
- Marine insurance
- Engineering insurance
- Commercial insurance
- Miscellaneous insurance
This will be discussed in the further section of this article in detail.
What Are Insurance Products?
Insurance products mean any product provided by an insurer in its insurance
whereby such insurer or undertakes to indemnify the insured person as to loss
from certain perils called “risks
” which are mentioned in the insurance contract
or to pay a specified amount with or without a benefit (depending whether it is
participating or non-participating product) in connection with the mentioned
risk contingencies or to act as a guarantee, including reinsurance agreements,
reinsurance treaties, reinsurance pools, property and casualty insurance
products, accident, and health insurance products, life insurance products,
surety bonds, specialty risk insurance programs, warranty programs, insurance
loss portfolio transfers and any other insurance or reinsurance product related
to the risk undertaken or commitment to pay the insured for specific types of
In other words, insurance products are those policies that form the basis of the
contract. Products are of several types but majorly we can distinguish insurance
products into 2 main categories: Life insurance products and general insurance
Insurance Products:The life insurance products include different life insurance policies that can
be differentiated based on the lump sum, payable premium, benefits after
exceeding the maturity period, etc. Different policies include different payable
premiums and benefits. Let's discuss these life insurance products in detail:
- Term Insurance Products:
These are those insurance products that have a fixed term after which even if
the event happens nothing is payable to the insured. Since these are life
insurance products, the event here is the death of the policyholder, if the one
insured by the insurer is the policyholder himself whereas in other cases, the
event is considered as the death of the insured within a specific period.
example, A person has opted for a term insurance policy at the age of 30 years
and the term insurance contract specifies that the term for the insurance is 10
years then unless that person dies before age of 40, no amount would be payable
to the nominee, whereas if the person suffers a heart attack at the age of 35
and dies then the insurer would have to pay the lump sum to the nominee who is
generally a family member of the insured.
Term insurance policies are not very popular in India and fewer people opt for
it as it is valid for a specific period only. Compared to other products term
insurance is the cheapest as the only premium payable to the insurer does not
include saving or investment in it, however, there are options where if the
insured person survives can ask for a return of the premiums paid during the
term of the insurance.
In simple words, Term insurance products are valid for a fixed term and
therefore the risk included is generally lesser as compared to whole life
insurance products which makes it the cheapest of all.
- Whole life insurance products:
These are those similar insurance products to term insurance products the only
difference is that here the term period is absent. As the name suggests that
these are products which carry till the person is alive. Generally, the age for
the payable amount to be paid by the insurer is 85 years, if a person crosses
the age of 85 years then the insurance companies pay the insured person the
amount that the insurer is bound to pay generally on the death of the person
Like term insurance products, whole life insurance products are also simple and
don't include any saving so the premium that is paid by the policyholder is also
lesser but not lesser than term insurance product as lesser risk means lesser
- Endowment products:
Endowment products are those products in which the lump sum is payable with the
benefits in terms of participating products where a certain amount of money is
invested by the policyholder into shares increasing the risks and benefits would
also include bonuses with the lump sum payable, here even if the person survives
the term until the maturity of the policy or either the person dies before the
maturity of the policy, whichever occur first.
In other words, the condition for the insurer to pay lump sump along with
benefits (in case of participating products) to the nominee (can be
policyholder) is either the maturity of the policy or the death of the insured
person or if the insured person crosses the maturity period of the policy.
- Money-back products:
These are similar to the endowment products, here the only difference is that
the sum assured to the insured person is paid in installments after completion
of the specified period. For example, a person who is 30 years old buys money
back life insurance policy after the completion of a term say 10 years would be
paid some part of the lump sum say 20% and similarly, after 20 years from the
date of taking policy would be given 50% of the lump sum and rest after the
completion of the maturity period of the policy. However, if the insured person
dies at any time of the period before maturity then the nominee would be paid
the full lump sum assured according to the contract.
- Linked life insurance products:
These are those products that are a combination of insurance and investments,
the premium that is paid by the policyholder is used partly into mortality
insurance cover and a part of it is invested into the funds. These are different
types of funds provided by the insurer to the insured person to invest in them
partly. These funds could be equities, bonds, debts, market funds, etc.
the flexibility provided to the insured cum investor to choose where to invest
his/her money according to his risk profile and financial commitments. A
policyholder who becomes an investor can switch his funds accordingly however
only a few free switches are allowed. This gives linked life insurance products
an upper hand as compared to other products as insurance and investments go hand
- Variable life insurance products:
Variable insurance may be a permanent insurance product with separate accounts
comprised of assorted instruments and investments like stocks, bonds, equity,
security funds.In simple terms, it can be described as a product that
guarantees interest credits along with the vanilla insurance policy that is
provided by an insurer though it is not very popular in India./
Health Insurance Products:We have already discussed what is health insurance? In this section, we will
discuss health insurance products.
There are generally 2 types of health
- Indemnity based health insurance products and
- Fixed benefit-based health insurance products.
- Indemnity based health insurance:
Indemnity health insurance product is
the vanilla policy for certain health conditions. Here a pre-decided sum is
assured by the insurer to the insured person who would be paid that amount in
case the insured person suffers a health condition. In this case, that sum would
be deducted from the hospitalization charges of the insured person. In short,
this is the basic health insurance policy that includes certain charges to be
reimbursed to the insured person in form of an assured sum.
The charges include Doctor's fee, medical equipment, Surgical fees, operation
theatre charges, medicines and consumables, hospital ward charges. In many
policies, pre and post-hospitalization are included too. Pre-hospitalization
charges include diagnosis, doctor's consultation charges, medical tests.
Post-hospitalization charges include further medication charges and consultation
- Fixed benefit based health insurance:
In this type of health insurance product, the amount payable to the insured is
fixed if the insured person has proof of hospitalization and proof that he/she
has spent money on medical conditions including hospitalization charges,
medication charges, and other charges such as room rent, etc.
This type of
insurance as the name suggests is provided on the happening of a certain
pre-defined event that is insured. Here it is important to note that the amount
paid in form of a premium to the insurer has no relation to the expenses
incurred by the insured person after a critical illness listed in the contract
To safeguard yourself it is recommended to choose a plan which lists at
least certain important critical illnesses that are common or can likely happen
to the insured in the future also it is important to note that once the critical
illness listed occurs, the policy automatically termites after the insurer bear
the cost of the expenses that were incurred by the insured.
General Insurance Products:General insurance products include generally those insurance products that are
non-life insurance or those products that do not insure life but other things
such as health, vehicles, marine, fire, etc. General insurance is generally a
contract that is done on yearly basis, also many variables are taken into
consideration as compared to life insurance to define the premium ratings.
Generally, products are categorized into two main types:
that are provided to a company or an organization and personal products that are
provided to individuals by the insurer.
The reason that general insurance products are annual is that they are subject
to change and may depreciate by losing their actual value may also become out of
fashion or the companies might face difficulty in providing service for that
products so companies prefer to take premium annually.
Which Insurance Products Should You Buy?
Till now we have discussed what all insurance products are there under different
types of insurance such as life insurance, health insurance, general insurance.
Health insurance also includes travel insurance which is again a non-life
insurance product. Whereas some insurers count health insurance as a part of
general insurance as it is a non-life insurance product. So here a question
arises that which insurance product is best. Well for that it is important to
understand the need for insurance.
For a person who just wants to be insured for
a specific term without spending money on premiums, term insurance would be
ideal whereas for someone else the need to ensure his/her life could be the time
till he/she would survive so here the whole life insurance product would be
ideal. If a parent wants to ensure his/her son/daughter's life then a child plan
would be better. So by comparing the needs of the insured these insurance
products should be brought.
So far it is discussed in the article that what is insurance and what all
insurance products are provided by the insurer to fit your needs, though it is
important to understand that every product has its pros and cons which should be
taken into consideration before buying an insurance product. However nowadays
participating products are more popular than non-participating products as
participating products gives an option to an insured person to invest in
different funds, though the risk is higher in these products, the benefit that
is provided after the maturity period of the policy comes to an end are greater
- Definition of insurance products, Law insider (Jan. 3, 2021, 8:27 pm),
- Julia kagan, variable life insurance, Investopedia (Jan. 3, 2020, 10:53