In today’s time, you don’t know when any risk can occur in your life or what can happen. Everything is merely unpredictable. The fact is you can get protected against all types of risks and one way to this is Insurance. Insurance provides you protection against all types of risks and acts as a guard. The person who takes the insurance is called the assured or insured and on the other hand, the person who undertakes the risk to protect the insured or assured is called the underwriter or insurer. Insurance may be an agreement whereby the insurer covers the monetary damages incurred by the insured as a result of the prevalence of unexpected incidents on a mutual basis for the payment of the premium by the insured.
According to J.B. Maclean, “Insurance is a method of spreading over a large number of persons a possible financial loss too serious to be conveniently borne by an individual”. In our country, a person can take as many insurances as he wants to get protected against the risk or losses. There are various different types of insurance by which the person can protect himself, some of these are Life Insurance, Marine Insurance, Fire Insurance, Miscellaneous Insurance, Property Insurance, etc.
Types of Insurance
There are different types of Insurance as mentioned under the Insurance Act,1938 :
- Life Insurance
- General Insurance
- Fire Insurance
- Marine Insurance
- Miscellaneous Insurance
Life Insurance is an agreement between the insurer and the holder of the policy. A life insurance agreement promises that the insurer provides an amount of money to the designated recipients when the covered policyholder dies in return for the premium charged by the policyholder over their lifetime.
In the case of Dalby v. London and India Life Assurance Company, the Life Insurance is defined as “it is defined as a contract to pay a certain sum of money on the death of a person in consideration of the due payment of a certain annuity for his life calculated according to the probable duration of life.”
Types of Life Insurance
Life Insurance is of a different types for the benefit of the insured against the risk or losses. The types are :
- Whole-life Insurance: In this type of Life Insurance the insured agrees to pay fixed rates every month over his life. The insurance balance shall be due to the death of the insured to his legal heirs or nominees. The intention behind this type of insurance is the benefit of the family members.
- Endowment Insurance: This type of insurance aims for the benefit of the insured or his legal representative or nominees as in this endowment insurance the insured agrees to pay premiums periodically for a set time and afterwards when the set time is matured the amount will be payable to the insured or if the insured is dead before the set time the amount will be given to the legal representative or nominee.
- Joint-life Insurance: In Joint Life Insurance, the insurance is of the husband and wife and the money under the policy becomes due to the death of any of them.
- Annuity Insurance: An annuity plan is an insurance scheme in which the insurer assents to pay the annuity purchaser a set of monthly annual payments for a specified time or a lifetime.
- Terms Insurance: In the term insurance plan, it will protect you against the risk and the premiums in this insurance are affordable and they are low and the benefit will only be in the case when if the insured will die during the term of the plan and if the insured survives then he will not be entitled to the benefit.
- ULIP: Unit Linked Insurance Plan (ULIP) is extremely beneficial as it is a mixture of insurance and investment both. ULIP aims to have wealth-building along with life insurance, where the insurance provider places a portion of life insurance assets and stays in a fund that is focused on equity or liability or both and suits your long term objectives.
General Insurance or we can say it as Non-life Insurance is an agreement that provides financial protection for any loss but does not include death. General Insurance compensates you for financial damages due to bike, travel, car, etc., related liabilities. The insurer wants you to just pay an amount guaranteed to cover any damage to your car, medical care, damages related to fire, etc. There are different types of General Insurance such as Fire, Marine, Miscellaneous Insurance.
Types of General Insurance
- Fire Insurance: Fire Insurance is also an essential type of Insurance. In fire insurance, it will provide you with protection against the losses or damages due to fire. The office, hospital, and the shops and in the industry the machinery and the factories, the raw material, finished goods, and the godowns also, etc., are covered under fire insurance.
In India, “the Insurance Act, 1938 section defined the fire insurance business as the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or another occurrence customarily included among the risks Insured against in fire insurance policies.
According to Halsbury, “It is a contract of insurance by which the insurer agrees for consideration to indemnify the insured up to a certain extent and subject to certain terms and conditions against loss or damage by fire which may happen to the property of the insured during a specified period”. In the case of Cotton LJ in Castellain v. Preston the fire insurance has been defined as it means a contract whereby one person undertakes in return for the agreed consideration to indemnify another person against loss of damage occasioned by a fire up to the agreed amount.
- Marine Insurance: Marine Insurance is a form of insurance covering freight losses or damages incurred to ships, container vessels, ports, and any carriage in which goods are transported or purchased from various points of origin to their final destination. This travel policy provides a sanctuary for shipping firms and couriers by ensuring insurance from transport-related risks because it protects them from expensive future losses when carrying goods by water.
- Miscellaneous Insurance: Miscellaneous Insurance includes Personal Accident Insurance, Property Insurance, and Liability Insurance.
- Personal Accident Insurance: It is a type of insurance in which the insurer has to pay the sum when the insured person has met with the accident but it does not include the accident which is caused by natural death or old age or any intentional act like suicide. In this type of insurance, the word accident means the act should be unintentional, enforceable, and fortuitous consequences. The types of risk which are insured under this insurance are the bodily injury resulting solely and directly from an accident caused by violent, external, and visible means.
- Property Insurance: Property Insurance is the insurance that covers the business or home physical products assets from all damages from burglary, fire, and all other risks. Property Insurance is considered to be an umbrella or bundle cover which by a single plan provides a combination of coverage. Flood insurance, earthquake insurance, homeowners policy, etc., could be included. Property Insurance does not include the risk which is occurred by water due to flooding, water seepage, tsunami, cyclones, etc.
- Liability Insurance: In Liability Insurance the insured will be protected from the risk and the insurer will pay for the damages for the third party loss if the insured is held liable and the act which is done by the insured should be of unintentional one and in this type of insurance the intentional act is not covered. There are several different types of Liability Insurance such as Product Liability Insurance, Professional Liability Insurance, Public Liability Insurance.
Professional Liability Insurance comes into picture into that situation when an individual has suffered losses due to an error in professional work. The Product Liability Insurance arises in those cases in which the product of any company has affected the individual and he has suffered damages and this type of insurance will protect the person who has manufactured the product.
In life, Insurance has become an essential part as it protects you from the risk or losses and it also transfers the risk to the third person and by this way only people have started saving money for paying premiums and insurance is a good option for investment but the insurance has very extensive legal formalities and it can also happen that you have to pay much more premium than the amount you will receive on the maturity of the policy. There are many types of insurance the right insurance for you will provide you and your family member safety. It is better to get advice from the skilled counsellor before opting any such insurance policy.
 KSN Murthy and KVS Sarma, Modern Law of Insurance In India 1(LexisNexis Butterworths Wadhwa, Nagpur, 2020).
 1884 15 C.B. 365.
 The Insurance Act,1938s.2(6A).
 KSN Murthy and KVS Sarma, Modern Law of Insurance In India 1( LexisNexis Butterworths Wadhwa, Nagpur,2020)
 1833 199 BD 380.
BY UDDESHYA YADAV | LOVELY PROFESSIONAL UNIVERSITY