Learn, Explain the Types of Insurance!
What Are the Different Types of Insurance? The person’s financial future can be affected by different circumstances that he or she cannot control or predict; thus, it is important to know about different types of insurance available that can help protect someone’s financial security in the event of asset losses, loss of income or even death. Also learned, Explain the Types of Insurance!
What are the Two main types of insurance?
1. Life Insurance pays you as the policyholder or your beneficiaries a certain sum of money in case of your death. Since the insurance coverage is more than a year, you have to pay the premium either every month, every three months or annually. Risks involved: are: your premature death, your source of income during retirement or in case of your illness. Its main products include lifetime policy, endowment, investment-linked, life annuity plan, and medical and health purposes.
2. General insurance is your protection from damages or losses excluded from the life insurance. Coverage period is yearly so your payment is made on a single-basis only. Risks involved are the loss of your property in cases of the thief, fire, etc., payment for injury or damage you have inflicted on a third party and your death or injury due to the accident. Its main products are motor insurance, fire insurance, personal accident insurance, medical/health insurance and travel insurance.
Types of Insurance Business are;
- Life Insurance or Personal Insurance.
- Property Insurance.
- Marine Insurance.
- Fire Insurance.
- Liability Insurance.
- Guarantee Insurance.
- Social Insurance.
These are explained below. The following main types of insurance are available today:
Life Insurance:
Life insurance is designed to provide a financial security to the family of a policyholder in the event of his or her death. Different types of life insurance are available to obtain nowadays. The most common ones are term life insurance and whole life insurance. A term life insurance is easily affordable but only covers an insured person for a specific length of time. On the other hand, whole life insurance is more expensive but provides coverage for the entire life of an insured person. Often, life insurance policies have exclusions to their coverage, such as pre-existing conditions. Make sure to go through all details of your policy with your insurance agent.
Health Insurance:
Health insurance generally covers medical expenses for health-related issues that an insured person experienced. Health-related insurance comes in many plans:
Major Medical Insurance plans cover a hospital, drugs and doctor’s visits bills. Major medical insurance plans usually come in the group or individual health plans. Group health plans are usually provided by a person’s employer. Group health plans are usually cheaper and cover more expenses. An individual health plan is a private insurance and should be purchased entirely by a covered individual. Individual health plans are more expensive and provide less coverage than group health plans.
Limited benefit plans are designed to cover an insured person for a particular health care setting or disease, such as:
- Basic Hospital Expense Coverage provides coverage for a period usually not less than a month of continuous in-hospital care and specified hospital outpatient services.
- Basic Medical-Surgical Expense Coverage provides coverage for a required surgery and also includes a certain number of days in-hospital care.
- Hospital Confinement Indemnity Coverage provides a fixed amount coverage for each day that a person spends in a hospital.
- Accident Only Coverage provides medical coverage in the event of disability, death, an accident or dismemberment.
- Specified Disease Coverage provides coverage to diagnose and treat a specific illness, such as leukemia, for instance.
Other Limited Coverage plans include dental or vision plans. Additional coverage plans provide extra protection for a person who becomes disabled and requires long-term care or Medicare enrollment. These additional coverage plans include disability income, long-term care insurance, and medical supplemental coverage.
Property Insurance:
Property Insurance includes homeowners or rental insurance. This type of insurance covers a person in the even his or her house or a rental apartment has been damaged by fire, flood, earthquake, theft and etc. Apartment complexes often require their renters to buy rental insurance before they can move-in day.
Auto Insurance:
Auto Insurance is one of the most popular types of insurance. A car may easily be one of the most expensive items a person owns. If your car is stolen or damaged in the accident, it may be very costly to repair. Auto insurance will pay to repair or replace a car if an insured person gets into an accident. Comprehensive motor vehicle insurance is considered to be the most common insurance policy that covers an insured person for loss, theft or damage to his/her vehicle. The cost of auto insurance will vary depending on a driver’s age, claims history, the make and type of car.
Other less common types of insurance plans include travel insurance, bond insurance, accidental death insurance, crime insurance, loan protection insurance, casualty insurance, deposit insurance (FDIC) and many others.
Marine Insurance:
Marine insurance provides protection against loss of marine perils. The marine perils are a collision with a rock, or ship, attacks by enemies, fire, and captured by pirates, etc. these perils cause damage, destruction or disappearance o’ the ship and cargo and non-payment of freight. So, marine insurance insures ship (Hull), cargo and freight.
Previously only certain nominal risks were insured but now the scope of marine insurance had been divided into two parts; Ocean Marine Insurance and Inland Marine Insurance. The former ensures only the marine perils while the latter covers inland perils which may arise with the delivery of cargo (gods) from the go-down of the insured and may extend up to the receipt of the cargo by the buyer (importer) at his go-down.
Fire Insurance:
Fire Insurance covers the risk of fire. In the absence of fire insurance, the fire waste will increase not only to the individual but to the society as well. With the help of fire insurance, the losses arising due to fire are compensated and the society is not losing much. The individual is preferred from such losses and his property or business or industry will remain approximately in the same position in which it was before the loss. The fire insurance does not protect only losses but it provides certain consequential losses also war risk, turmoil, riots, etc. can be insured under this insurance, too.
Liability Insurance:
The general Insurance also includes liability insurance whereby the insured is liable to pay the damage to property or to compensate the loss of persona; injury or death. This insurance is seen in the form of fidelity insurance, automobile insurance, and machine insurance, etc.
Social Insurance:
The social Insurance is to provide protection to the weaker sections of the society who are unable to pay the premium for adequate insurance. Pension plans, disability benefits, unemployment benefits, sickness insurance and industrial insurance are the various forms of social insurance. Insurance can be classified into four categories from the risk point of view.
Guarantee Insurance:
The guarantee insurance covers the loss arising due to dishonesty, disappearance, and disloyalty of the employees or second party. The party must be a party to the contract. His failure causes loss to the first party. For example, in export insurance, the insurer will compensate the loss at the failure of the importers to pay the amount of debt.
Other Forms of Insurance:
Beside the property and liability insurances, there are other insurances which are included in general insurance. The examples of such insurances are export-credit insurances, State employees insurance, etc. whereby the insurer guarantees to pay a certain amount at the certain events. This insurance is extending rapidly these days.
Miscellaneous Insurance: The property, goods, machine, Furniture, automobiles, valuable articles, etc. can be insured against the damage or destruction due to accident or disappearance due to theft. There are different forms insurances for each type of the said property whereby not only property insurance exists but liability insurance and personal injuries are also insurer.
