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GIC Re Actuary Stream Exam Preparation Course: Comprehensive Guide With Detailed Modules
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Overview:

Insurance is a risk management tool that helps individuals and businesses manage the financial consequences of unforeseen events. Different types of insurance exist, each designed to provide coverage against specific risks. This lesson will focus on four major categories: general insurance, life insurance, health insurance, and other specialized forms.


1. General Insurance:

  • Definition: General insurance refers to non-life insurance policies. These policies cover risks other than those related to life, such as property damage, liability, and health.
  • Examples:
    • Motor Insurance: Covers damage to or theft of vehicles.
    • Home Insurance: Protects homes and belongings from damage or loss.
    • Travel Insurance: Covers risks associated with travel, including medical emergencies, lost luggage, or trip cancellations.
    • Liability Insurance: Protects businesses from lawsuits or claims arising from injuries or damage caused by their operations.
  • Characteristics:
    • Usually short-term (renewed annually).
    • Does not accumulate cash value.
    • Provides coverage for a wide range of risks.

2. Life Insurance:

  • Definition: Life insurance provides financial protection to the policyholder’s beneficiaries in the event of their death.
  • Types of Life Insurance:
    • Term Life Insurance: Provides coverage for a specified period. If the policyholder dies within that period, the beneficiaries receive a payout.
    • Whole Life Insurance: Offers lifelong coverage with an investment component that builds cash value over time.
    • Endowment Policies: Pays out a lump sum after a certain period or upon the death of the policyholder.
    • Unit-Linked Insurance Plans (ULIPs): Combines life insurance with investment in equity or debt markets.
  • Characteristics:
    • Aimed at providing financial security to dependents.
    • Can have an investment or savings component.
    • Long-term coverage.

3. Health Insurance:

  • Definition: Health insurance covers the cost of medical expenses incurred due to illness or injury. It can cover hospitalization, doctor visits, surgeries, prescriptions, and more.
  • Types of Health Insurance:
    • Individual Health Insurance: Coverage for an individual’s medical needs.
    • Family Health Insurance: Covers the medical expenses of an entire family.
    • Critical Illness Insurance: Provides coverage for specific critical illnesses such as cancer, heart attack, or kidney failure.
    • Accident Insurance: Covers expenses incurred due to accidents, including medical costs, disability, or death.
  • Characteristics:
    • Provides financial protection against high medical costs.
    • Can be bought individually or as part of group plans offered by employers.
    • Often involves co-payments, deductibles, and exclusions.

4. Other Specialized Types of Insurance:

  • Disability Insurance: Provides income replacement if the policyholder becomes unable to work due to injury or illness.
  • Workers’ Compensation Insurance: Covers employees who are injured on the job, providing medical expenses and compensation for lost wages.
  • Pet Insurance: Covers veterinary expenses for pets, including routine care, accidents, and illnesses.
  • Mortgage Insurance: Protects lenders against the risk of default on mortgage payments.
  • Travel Insurance: Covers risks while traveling, including medical emergencies, trip cancellations, or lost baggage.

Key Takeaways:

  • General Insurance: Provides coverage for property, liability, and other non-life risks.
  • Life Insurance: Protects families and beneficiaries in the event of the policyholder’s death, with both temporary and permanent options.
  • Health Insurance: Covers medical expenses, including hospitalization, surgeries, and emergencies.
  • Other Types of Insurance: Addresses specialized risks such as disability, workers’ compensation, and travel.
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