Understanding insurance can be complicated. Allow this article to explain the basics of insurance to help you understand how your choice of insurance will protect your lifestyle, assets, and personal property.
What is Insurance?
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. These policies are used to hedge against the risk of financial losses, both big and small, resulting from damage to the insured or her property or liability for damage or injury caused to a third party.
Insurance is meant to protect you, your family, and the things you care about. The insurance you buy depends not only on what you want to preserve but also on what you can afford. Some insurance policies are must-haves – like your car insurance or fire insurance. With so many types of policies out there, how do you choose the right one?
Types of Policies
Below are three main types of insurance policies and their purposes:
Life insurance can help secure your beneficiaries’ financial stability and create a meaningful legacy. Find resources to achieve your goals and create a solid foundation to support your family through all life’s stages:
- For your dependents to receive financial support in the event of your death or total permanent disability
- For your savings and investment, and
- For a regular income during retirement
Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured due to illnesses or accidents. There are essentially two kinds of health insurance: Fee-for-Service and Managed Care. You can also choose to add long-term care and disability insurance. Now, plans in the U.S. are required to offer several “essential health benefits,” which include:
- Emergency services
- Laboratory tests
- Maternity and newborn care
- Mental health and substance abuse treatment
- Outpatient care (doctors and other services you receive outside of a hospital)
- Pediatric services, including dental and vision care
- Prescription drugs
- Preventive services (e.g., some immunizations) and management of chronic diseases
- Rehabilitation services
General insurance is designed to protect the things you value. Your insurance company will pay you the sum assured or an agreed amount to cover some or all the loss under certain situations.
- Loss of your belongings when you travel
- Damage to your car (which is required by law)
- Damage to your house
There are also property and casualty companies insured against accidents of non-physical harm. This can include lawsuits, damage to personal assets, car crashes, and more. Large property and casualty insurers include London Insurance Agency, State Farm, Nationwide, and Allstate.
What Insurance Do You Need?
To help you decide what insurance you need, make a list of the risks or events that concern you. Assess the likelihood of the event happening and the financial loss you or your dependents may suffer – like financial loss from large hospital bills, repair for car damage, etc. If you already have some insurance policies, check to see if these cover the risks you are concerned about. If you don’t have one, come to London Insurance Agency as soon as possible. Remember, you do not need to have insurance for everything, just the things that could set back your financial situation or your financial goals!