Insurance is a method of risk management and is utilized to protect an individual or a company from financial losses. The policyholder or insured individual buys an insurance plan or policy from a company for a price known as the premium. An insurance policy is based on the idea of sharing risks between the insured and the insurer. If the insured experiences a loss that is covered by the policy, he files a claim to the insurer. This article lists various types of insurances and helps you choose one for yourself!
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Life Insurance
The idea behind life insurance is to leave some money for your family when you die. Often, a family is dependent on one or two bread earners who provide for the family. Therefore, if the bread earner dies, the family must have something to meet their needs. According to insurance experts, a life insurance policy premium should be 10% of your yearly income. When provided to the family, this amount should cover the funeral expenses of the deceased, other ongoing expenses like mortgage payments and allow for some money to be allocated for the future. Life insurance is of two types: Term Life, where the insured pays for a set time, and Traditional Whole Life, where the insured pays until he dies.
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Health Insurance
They say that one is only an illness away from bankruptcy. Health insurance allows one to cover his medical expenses in case of any illness or medical procedure. It also provides for other needs while one is unable to earn due to bad health. There are various types of medical insurances. Some cover private hospitals and medical bills, while others cover traumas and major diseases like heart disease, paralysis, cancer, and other such diseases. Some plans pay a certain percentage regularly to cover ongoing medical conditions such as diabetes. Certain plans cover permanent disabilities and sickness, while others cover the mortgage if one can’t work.
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Auto Insurance
Automobile insurance is one of the most common insurances that people buy. Every year, millions of car accidents happen on the road, killing thousands and leaving several disabled for life. Therefore, one must get the vehicle insured to prevent suffering a financial loss. Auto insurance covers the repair expenses or replaces the car if it cannot be recovered. Some auto insurances also cover the property destroyed due to the accident. Auto insurances also pay for the damage caused to the other persons as a result of the accident. Additionally, if an insured vehicle is stolen, the insurance policy replaces it with another car.
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General Insurance
A general insurance policy covers everything besides one’s life. However, it is especially important to study general insurance terms properly, as they can be misled by the company or misunderstood by the individual. General insurance policies usually span one year, and the premium is usually paid at one time. Some risks covered by a general insurance policy include property loss, such as a stolen car or a burnt building, accidental death, travel insurance, and more.
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Travel Insurance
Travel insurance covers a wide range of aspects. The policy covers emergency medical expenses while one is traveling, any personal liability if one is sued for causing an injury or damaging property, and lost belongings like bags and devices. The travel insurance policy also covers the costs of canceling, cutting, or delaying flights and trips. However, the insurance does not cover any medical condition that was pre-existing before traveling. It is also important to know that the policy does not cover any injury incurred in an adventurous sport or any other dangerous activities.
Before choosing an insurance policy, look carefully at the issues covered. Make sure that the right premium is charged and discuss this in detail with the insurance company. Also, be aware of how to end the policy if needed!
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