By Herman Sutton
Insurance is primarily a way of protection against financial loss in case of an accident. However, it is also a form of investment, primarily utilized to hedge off against the potential risk of some uncertain or contingent future expense. Some people view insurance as a tool for deferring taxes while others see it as a tool for protecting their wealth. However, the main goal of an insurance policy is to provide protection and if there is any doubt about the need, one should purchase it.
There are four basic insurance policies that a policyholder can avail of: life, health, automobile and property. The life policy, like all other policies, is basically a contract between the insurer and the insured. The insured pays a premium every month or in any other manner to the insurer and in return receives an assurance that his life will be protected from the risk of death. As the premium is raised, the insurance premiums become large until the time when the policyholder is not able to pay the premium anymore and his death becomes inevitable.
Health insurance, on the other hand, involves the sharing of the cost between the insurer and the insured. The insured pays premiums every month in return for the assurance that the insurer will pay the expenses related to medical care of the insured. If the insured dies, the insurer makes a payment equal to the amount the insurance company has invested in the policy. If the insured is injured during an accident, the insurer pays certain sums to the injured person and the insurer reimburses the expenses of the hospital in which the insured had to be treated.
Automobile insurance is another form of insurance. In this insurance, a certain amount is paid by the insured for the assurance of repair of the insured vehicle if it gets damaged. If the insured car is stolen, the insurance company takes care of repairing the car and pays the insured for the amount the car cost. The level of coverage differs with different insurance companies. However, some basic insurance rules apply for all types of insurance.
Life insurance is one of the most important types of insurance. This insurance is used to provide long-term disability coverage to the survivors of the insured’s family. There are many insurance plans for the whole family to choose from. Most people opt for the more comprehensive plans, including health insurance, while they are still young, as it usually becomes more expensive as you grow older.
When it comes to life and health insurance, do some research and find out which type of insurance best suits your financial and physical needs. Choose a plan that will provide you with adequate coverage and which is the most affordable. It is also wise to talk with an insurance advisor to find out which plan is right for your situation. Remember, the right type of insurance can help you secure your finances and protect your family in the event of your sudden demise.
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