Different Kinds of Insurance
Updated: Jan 31
What is Insurance?
Insurance is financial safety, helping you and your family recover after something bad happens such as theft, fire, accident, or car lawsuit. You’ll receive an insurance policy when you purchase insurance which is a legal contract between you and your insurance provider. An insurance policy/plan is a contract between an insurance company (Provider) and an individual (Policyholder). Under the contract/policy, you pay regular amounts of money (as premiums) to the insurer, and they pay you if the sum assured on unfortunate events arises, for example, untimely passing of the life insured, an unfortunate accident, or damage to a house.
What are the Different Kinds of Insurance?
1. Health Insurance
Health insurance is an insurance that covers medical expenses. It is a way of paying your medical expenses and health care costs. It is often included in employer benefit packages with premiums partially covered by the employer but a lot of time it is also deducted from employee paychecks. It specifically pays for medical, surgical, prescription drugs, and sometimes dental expenses incurred by the insured. Health insurance can reimburse the insured for expenses acquired from illness or injury, or pay the care provider directly.
2. Life Insurance
Life Insurance is a type of contract between you and an insurance company. This is to reassure you that your dependents, whether your children or partner, will be financially considered in the event of your death. It can provide your family with a financial safety net by helping to replace your income or serving as an inheritance for loved ones. There are a lot of things to think about when buying it, such as the type of policy you want when you need it, and how to buy it. This is a complex subject, and each person should buy it in accordance with their needs.
3. Disability Insurance
This type of coverage is intended to replace your salary if you were to become disabled. This provides partial income so you can pay your bills if you get too sick or injured to work. Some employers offer short and long-term disability benefits to their employees. A short-term policy helps you after any incident, and a long-term policy helps provide financial protection for disabilities that can last for years.
Every disability policy has a specific definition of disability that you must be covered in order to get benefits. These two most common definitions used by disability insurance companies are:
Own occupation: a person is considered disabled if they are no longer able to perform the work they had prior to becoming disabled.
Any occupation: a person is considered disabled if they are unable to perform any work at all.
4. Liability Insurance
Liability insurance is designed to offer specific protection against third-party insurance claims, this is often attached to your homeowners’ policy, and it covers accidents that may happen at your home. For example, if a guest at your home suddenly slipped on your stairs or floor, you might be responsible for their medical expenses if you were found liable for the accident. Liability coverage would diminish those costs.
5. Renters and Homeowners Insurance
Homeowners’ insurance and renters’ insurance both provide financial protection for policyholders against medical payments to others, legal liability costs, property damage, and the costs of living out of the home. The principal difference between homeowners’ and renters’ insurance is that home insurance policies include dwelling coverage, while renters’ insurance policies do not. "Dwelling" refers to the structure of a home, and dwelling coverage covers any physical damage to the home itself (roofs, walls, doors, floors, and other parts of the structure). Other policies are essentially the same; moreover, renters’ insurance is much cheaper compared to homeowners’ insurance.
6. Automobile Insurance
This protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company will agree to pay your losses as outlined in your policy. Your auto policy insurance will cover you and other family members on your policy, whether driving your car or someone else’s car (with their permission). Your policy will also provide coverage if someone else who is not on your policy is driving your car with your consent.
7. Long-term Insurance
Long-term care insurance usually covers all or part of assisted living facilities and in-home care, provides nursing-home care, home health care, and personal or adult day care for individuals age 65 or older or with a disabled or chronic condition that needs persistent supervision. You should also consider if you have assets outside the policy that could pay for your care. Unfortunately, long-term care insurance can be very expensive, but you can look into cross policies that cover the same events.
Know how to protect yourself
It is important to protect yourself from financial setbacks that could jeopardize your future. You need to purchase the level of coverage that’s right for your family and not more than you need. In any case, something might happen. Every penny you spent on your monthly insurance will all be worth it. Nevertheless, you have to consult with a professional’s advice to know what proper insurance will be right for you and your family.