Insurance is the financial compensation provided by the insurer to the insured in the event of unforeseen financial losses in lieu of periodic payments made by the insured. Insurance extends financial assistance to a company, individual or any other entity. There are some forms of insurance that are mandatory while some are optional. When an insurance provider and an insured agree to the terms and conditions of the insurance policy, the policy comes into effect. In majority of the cases part of the loss is borne by the insured, which is referred to as the deductible and the remaining amount is paid by the insurer or the insurance provider.
Common types of insurance include-
* Health insurance
* Disability insurance
* Life insurance
* Business insurance
* Auto insurance
It may be mentioned here that the sole purpose of insurance is not to guide consumers in budgeting their expenses but to protect them during a financial catastrophe.
Insurance can be bought either on your own or with the help of an insurance agent. There are different insurance companies in the market offering insurance policies.
Prior to buying an insurance policy, the following aspects need to be addressed-
Type of insurance needed-
* You must assess your requirement and decide upon a policy accordingly.
* The damage the policy is covering also needs to be taken into consideration. Policies vary from one another depending on the coverage they are extending. In few cases, there is coverage for specific dollar amounts.
* You need to decide whether you are buying the insurance policy on your own or from an agent.
Brief information on the different types of insurance policies is given below-
Auto insurance in most of the states is mandatory. Auto insurance is bought mainly for two reasons.
* To insure liabilities you have to other people
* To insure against damage inflicted to your car by others.
Life insurance may be either pure insurance which pays on the policy’s holder’s death. The other can be cash value insurance. Majority of the policy holders are well off with pure insurance as well as savings for retirement.
Health insurance is very much necessary and you should decide upon an insurance plan keeping in mind the deductibles and the premiums. Basically, there are 3 types and other traits may be formed by mixing and matching policy traits.
* Fee for service- allows a policyholder to get covered for almost any medical condition. It is a bit expensive.
* Preferred Provider Options- allows a policyholder to self refer him to any provider available in the PPO list.
* Health maintenance organizations or HMOs- this type of health insurance is the least expensive and but has the maximum limitation.
Also referred to as disability income insurance, this insurance policy takes care of the financial expenses when an individual is out of job due to disability.
This type of insurance extends financial coverage for businesses rather than for individuals. This kind of insurance protects business houses against risks.
Prior to selecting a particular type of insurance policy, you need to shop around for the policy which suits your needs the best. You can compare rates and costs of different insurance providers online or by consulting an insurance expert.