Types of insurance

Life insurance protects a person's family against the money problems of his or her early death, and protects the person in old age. It is also a way to save and invest, because the money paid in comes back with additions. Since a life cannot be measured in money, it is not a contract of indemnity: the insurer pays the agreed sum.

For example, a person of 30 takes a policy that runs until the age of 60. If the person lives to 60, he or she receives the money; if the person dies earlier, the family receives it.

The main kinds of life policy are the whole life policy, the endowment policy, the joint life policy, the annuity policy, and the children's endowment policy.

Fire insurance covers loss of property by accidental fire. Fire must be the proximate cause of the loss, and the fire must be accidental, not deliberate. The insurer pays the actual loss, and the policy usually runs for one year. Insurable interest must exist both when the policy is taken and when the loss occurs.

Marine insurance covers losses from the perils of the sea, such as a ship sinking, running aground or colliding. It takes three forms:

• Hull insurance: covers the ship itself.
• Cargo insurance: covers the goods carried by the ship.
• Freight insurance: covers the freight, the charge for carrying the goods.

In marine insurance, insurable interest needs to exist only at the time of the loss, because ships and cargo often change hands during a voyage.

Other kinds of insurance include health, motor vehicle, burglary, cattle, crop and sports insurance. The government also runs social security schemes for ordinary people, such as the Atal Pension Yojana and the Pradhan Mantri Jan Dhan Yojana.