Major Types of Insurance

The purpose of insurance is to protect yourself or your loved ones against the financial impact of a tragedy such as unemployment, robbery, property destruction, illness or death. Essentially, it is a hedging instrument which acts as a “protection net” securing you from potential financial losses in the future. Provided below are major types of insurance schemes and policies.

Auto Insurance

Auto insurance protects against financial loss in the event of a car accident. You agree to pay the premium and the insurance company agrees to pay losses as defined in your policy. Auto insurance provides property, liability and medical coverage:

• Property coverage pays for damage to or theft of your car.
• Liability coverage pays for your legal responsibility to others for bodily injury/property damage.
• Medical coverage pays for the cost of injuries or rehabilitation.

Health Care Insurance

Health Care Insurance is insurance that pays for medical expenses. In each case, the individual or covered groups pays premiums or taxes to help protect themselves from routine immunizations to unexpected healthcare expenses or medical emergencies such as a car accident or a family illness. Health care insurance comes in three types:

Fee for service, which is the most expensive, allows you to go to almost any provider. You don't have a primary care physician who has to approve visits to specialists.

Preferred provider options (PPO's) allow you to self-refer to any provider in the PPO's list and generally cover a wide variety of services recommenced by those providers.

Health maintenance organizations (HMO's) are the least costly, but the most restrictive. They assign you (or allow you to select) a primary care physician. That physician decides what is medically necessary and when you may see a specialist.

Life Insurance

Life Insurance provides a monetary benefit to a decedent's family or other designated beneficiary. It may provide for income to an insured person's family. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

By purchasing a life insurance policy, the financial hardship due to a sudden death of a family member or a disability resulting in a loss of job or inability to work can be avoided.

Disability Insurance

Disability insurance provides financial support in the event the policyholder is unable to work because of a disabling illness or injury. It provides monthly support to help pay such obligations as mortgages or credit cards. It includes paid sick leave, short-term disability benefits, and long-term disability benefits.

Homeowner's Insurance

Homeowner's insurance provides compensation for damage or destruction of a home from disasters. In some geographical areas, the standard insurances excludes certain types of disasters, such as flood and earthquakes.

Property Insurance

Property insurance provides protection against risks to property, such as fire, theft or weather damage.

Travel Insurance

Travel insurance provides protection on any financial or any other losses which is incurred by the insured while traveling (nationally or internationally).