Insurance is a great way to mitigate any possible future risks in your life. No one can foresee the future, it can be peaceful, or it can be disastrous. So, preparing for tough days in good times is always a wise approach. Insurance plays a crucial role in managing financial instability during misfortune events. Accidents, death, critical illness, fire hazards, and floods can occur anytime. And people with no financial planning to deal with all this end up selling their valuable assets or property. To deal with difficult times, investing in a good insurance policy is very essential.
Mainly all insurance falls under two types of insurance; general and life. Life insurance pays for your health, i.e., chronic disease, accident, and disability. Life insurance also pays money to the dependent family members after the death of an insured person. In comparison, general insurance covers your damaged or misplaced assets/belongings, i.e., car, bike, apartment, plot, and pet. These two types of insurance have further different policies. The 7 most common types of Insurance Policies are broken down into the following categories.
7 Main kinds of Insurance Policies
Health is the most fantastic form of wealth we all have. But due to several lifestyle changes and eating habits, diseases like diabetes, blood pressure, obesity, and heart diseases are rising. People from the age group under 45 are also suffering from these diseases. A medical facility is getting expensive every year, making it difficult for people to get proper treatment.
A good health insurance plan is a suitable investment that covers routine tests and treatment. You can get a health insurance policy for the complete family instead of buying individually for each one. Some health insurance policies cover half of the expenses, while other covers full medication and treatment.
Getting health insurance at an early age has several benefits. Young people have to pay less premium as compared to older adults. Moreover, they get more coverage options from the company. A chronic illness can lead you and your family to a massive financial crisis. So, for a healthy future, pick the best health insurance policy for yourself and your loved ones.
On-duty employees are at risk of hazards or accidents. Due to this, they can become physically disabled and unable to earn money. Disability insurance can be beneficial in this situation. It covers half income so that you can pay your bills. Disability insurance offers short-term and long-term benefits. The short-term policy lasts 3 to 6 months and covers initial treatment. Long-term policy is designed for several years or lifelong disability. In the long term, disability policy coverage plans are renewed every year.
3. Long Term Care
A long-term care insurance policy is for people who need full-time assistance. Older adults more than 65 get benefits from this policy as they cannot take care of themselves and need assistance 24/7. The company offers home nurseries, old homes, and in-home care services in this policy.
Buying long-term care insurance for your older self is an intelligent decision. You don’t have to sell your assets and property to pay the hospital bills. You avail of care services easily because you know you have funds to pay the charges.
To get the maximum benefit from long-term care insurance, you should buy it before you need it. The best time to register for this policy is in your 50s or 60s.
4. Life Insurance
Everyone wants a safe and secure future for their children. A life insurance policy can ensure you secure the end of your children. It provides financial security to your family in case of any tragedy. Your children can fulfill their financial needs in your absence. It helps you in achieving financial goals and gives life cover protection. To get life insurance, you need to provide a premium on a monthly basis. These monthly premiums keep accumulating to make a handsome amount of funds.
Let’s break down the basics of life insurance.
There are 5 primary reasons why people purchase life insurance:
- To provide for their family in case of death
- To protect loved ones from paying off debts
- To cover funeral expenses
- To pass wealth to heirs
So, what types of life insurance plans are there? Well, there are 7 primary types:
1. Term life insurance
Term life insurance only lasts for a specific period. If an insured person passes away during his term, his family will get insurance benefits.
2. Term Universal Life
Let’s you extend the terms of the policy after you are in the plan. Unlike term, you can choose from 10 options, tailoring the policy to your current financial state.
3. Whole Life
Whole life will cover you for your entire life, as long as you keep up the premiums. More expensive than term, whole life will set aside part of the premiums into an account to help cover those premiums older in life.
4. Blended Life
A combination of term and permeant, blended life’s future dividends paid on the policy are used to convert the term coverage into permanent coverage.
5. Universal Life
As long as you make the premiums, your covered. There is an investment component, which you get to choose. Beneficiaries either receive the face value or the face value plus the cash value of the investment account. The face value can rise and fall with the value of the investments.
6. Variable Life
Similar to universal variable life, but usually offering more investment options, including stock, bonds and mutual funds. The face value will rise and fall with the value of the investments
7. Permanent life insurance
If you hear Permanent life insurance, it’s referring to insurance that lasts your whole life. Permanent life insurance policies costs higher than the term life insurance policies and include types such as full life insurance, universal life insurance, burial insurance, and survivorship life insurance.
Compare different life policies and choose the one that suits you the most.
Back to the 7 general types of insurance, we’re now at auto insurance.
Every automobile owner is legally bound to have an insurance policy. It is one of the most suitable investments you make to protect yourself and your net worth.
Automobile insurance further has several types:
- Injury liability
- Property /asset damage liability
- Medical treatment payments
- Complete coverage
- Accident coverage
- Car driver coverage (uninsured/underinsured)
Automobile insurance offers a variety of coverage depending on your needs and risks. Among all types, comprehensive insurance provides the most range, which might not be the most expensive. So, getting a quote from the company and comparing premiums is necessary.
6. Homeowners and Renters
Homeowners insurance is for those who own a home structure and its belongings. In this policy, the company pays the claims for structural damage and stolen or damaged belongings of a home or apartment. It will save money from your pocket and will pay for any eligible repairs. Additionally, it can also accommodate any replacements required in the home.
Renters’ insurance coverage is limited to belonging to the apartment of the home. It doesn’t cover any loss of structure or property. You should buy a supplementary policy for other valuable items. It mainly covers potential liabilities, personal belongings, and loss of use coverage.
7. Liability Insurance
Liability insurance protects you from 3rd party claims for bodily injuries and property damages.
Liability insurance has further three types
- General liability covers any damages caused by your business. It could be bodily injury, loss of asset/property, or reputation harm.
- Professional liability helps you deal with the claims made by unsatisfied customers. This policy assists you in preceding the case legally and covers its cost.
- Employer liability insurance takes care of your employees if they get sick or injured on duty. It covers their medical treatment and protects your business from any lawsuit for work-related injury or illness.