Insurance can be termed as a form of risk management which is mainly used to protect an individual against the risk of prospective financial loss, if any.
Insurance can be used as a tool to shield an individual against potential risks like travel accidents, death, unemployment, theft, property destruction by natural calamities, fire mishaps etc. Different types of insurance is used to cover different properties and assets such as vehicles, home, health care etc.
Basically, an insurance policy can also be known as a protection net which secures you from any financial losses in future. All you have to do is pay the insurance agencies a specified amount every month, known as premium, so that they can take care of you by providing you financial back up in case of a sudden health emergency or a fatal incident. There are two ways for getting an insurance done.
Health Care Insurance With such high medical and health care costs these days, it’s hard to even think about visiting a doctor. But what about an unexpected mishap or an unforeseen disability or attack, where the potential medical bills could shoot up to a sky? Where would you get so much money from? These are exactly the situations where you feel you had a security, something which could come to your rescue and save you from such financial crisis. While some companies do provide its employees with health insurance, for others, this is a must. Especially for the aging couples, who have a comparatively more chances of needing emergency bill money. The health insurance does it all, so that they do not have to worry for the huge payments at the last minute. A health insurance can cover all from a routine immunization to a major illness. Life Insurance Loss of a family member is a catastrophe which glooms a family’s life. But even more tragic is the death of a sole bread earner for the family, who then has to go through the pain of losing their loved one, as well as the financial loss putting their survival in jeopardy. This financial hardship due to a sudden death of a family member or a disability resulting to a loss of job or inability to work can be avoided to a great extent by taking up a life insurance policy. A Life insurance or disability insurance covers such losses and pays a family, compensation to restore the earnings lost by them due to a sudden death or disability. The monthly premiums for a life insurance are generally based upon the age, health, and occupation information of the applicant, in addition to the total benefits to be paid to him for his policy.
Home Insurance Real estate property and hard assets are subject to accidental risks like theft, destruction due to natural disasters or fire accidents etc. with such huge investments gone into buying a real estate property like your home or office, the risk involved is a loss of large amount of money. Home and property insurance helps you in managing and protecting against these risks. The cost of a real estate property and its insurance is mostly based upon the worth of the already insured hard assets and also the location in which the assets are situated.
Travel Insurance This is intended to cover any of the financial or any other losses which were incurred by the insured while traveling, be it nationally or internationally, such as mountain trekkers, cruise travelers etc. Auto Insurance Any vehicle on road, no matter how safe its driver is, is bound to meet with an accident or two, which may leave it with just a few scratches, or crash it up totally. Most countries today require you to have an auto insurance while on road in your vehicles. If you have an accidental car crash, a total repair could cost you a fortune. On the other hand, a little scratch on your Land Cruiser might also soar up your bills to a high. Whether or not you need an auto insurance mostly depends on the type of car you own. If you have an expensive car and a little repair could wipe you out financially, you should very well go in for a buying an all-inclusive and crash insurance which could protect you against any and every harm done to your vehicle.
Quoted from : theloanbazaar.com/insurance
STEPS FOR BUYING INSURANCE
Use these three steps when buying insurance:
Step One: Do I need this type of insurance at all? Figure out what the type of insurance you are considering covers and decide whether you need it.
Step Two: How much of this type of insurance do I need? Policies vary in how much they cover. Some cover specific dollar amounts. Others cover percent of loss. Some have a deductible. Others exclude certain types of damage. Look at these differences among policies and decide which one is for you.
Step Three: Where will I buy it? If you are working on your own, the web has a host of services to help you comparison shop among companies. Type in "insurance" on most search engines and you will come up with a number of sites. If you are working with an agent, you may be working with a captive agent which means (s)he can only sell you policies form one company or an independent agent which represents several.
When selecting a company, consider also whether the company is both able and willing to pay on claims should you make one.. AM Best and other companies rate the financial solvency of insurance companies. The web comparison shopping services usually include and explain the ratings. You can also ask the company itself or your agent.
Consider also the company's record for trying to refuse to pay claims. Your state insurance commission may have a record of complaints.
When buying any insurance, you will most likely save money if you pay annually or semi-annually. Sometimes buying several types of insurance from the same company will save you money. Often taking steps to make claims more unlikely, such as installing deadbolt locks or taking a safe driving course will lower your premiums.
When shopping for insurance, also look into group policies offered by alumni associations, professional associations, or religious bodies. Usually you can forget about specialized insurance advertised on television with paid endorsers. They usually cover very little.
HEALTH INSURANCE
Don't go without this. Most people have it at work, but if you don't you will really save big by going for a group policy. When comparing policies, consider deductibles and what is or isn't covered. When given a choice, choose one that covers the huge, debilitating conditions over one that is good about routine immunization, but that balks at the larger, more expensive claims.
Health insurance comes in three types, though many policies mix and match traits of the three.
Fee for service, the most expensive, allows you to go to almost any provider and covers almost anything that is medically necessary. 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. Some PPO's cover other providers, but with a larger co-payment.
Health maintenance organizations (HMO's) are the least costly, but the most restrictive. They assign you (or let you select) a primary care physician. That physician acts as a gatekeeper in that (s)he decides what is medically necessary and when you may see a specialist. Often the HMO itself has to permit certain treatment and can rule against your doctor if it thinks the treatment is too costly.
LIFE INSURANCE
For most people, the purpose of life insurance should be to replace the financial contribution made by a family member.
Life insurance can be pure insurance, which pays only on the death of the insured, or cash value insurance, which also has a savings vehicle. Most people who need life insurance are better off with pure insurance and saving for retirement through other vehicles.
Proceeds from life insurance cover three types of expenses: replacement of the policyholder's income or work, estate taxes, and burial costs. When you consider the amount of insurance to buy, consider the following:
1. Most of the life insurance should be on a family member whose salary is important to the family budget.
2. Consider a relatively small life insurance policy on a stay-at-home parent to cover child care and other expenses.
3. Don't buy life insurance on children. Instead, buy life insurance on other family members for the benefit of children.
4. Consider reducing the amount of life insurance you have as you build more financial assets.
5. Pass on credit life insurance and mortgage life insurance if you can. These plans are restrictive and expensive. Buy more general life insurance instead if you feel a need.
6. Pass on life insurance altogether if you are single and don't have anyone depending on you. At most, get a small policy to spare your family burial expenses.
You should buy about 12 times the amount of money you would need annually to replace what the family member is contributing. For example, if you would need $40,000 a year to replace the death of an employed member, you would need a $480,000 (rounded to $500,000) policy.
AUTO INSURANCE
In most states you are required to have auto insurance and you don't want to be without it.
Basically, you buy auto insurance for two purposes: to insure against liability you have to others and to insure against damage that others do to you or your car.
You need to have liability insurance. How much you need depends on how much you have in assets.
Whether you need insurance to protect your own car depends on your car and how detesting it would be to replace it.
If your car is expensive and if buying another one would wipe you out financially, consider buying comprehensive and collision. If you have an older car and wouldn't get much from the insurance company if it were totaled, don't bother. Instead, put the money you would have paid for comprehensive and collision toward saving for your next car.
HOMEOWNERS' INSURANCE
The purpose of homeowners' insurance is to protect you against damage to your home and property from natural disasters.
Insurance companies offer different ratings of insurance and assign these ratings with codes starting with the letters "HO". While these ratings are fairly standard, they do vary a little with companies, so check with the company to see what policies cover.
When comparing policies, consider differences among deductible, coverage of property other than the house (sheds, garages, etc.), and percent of loss covered. Consider also whether the policy covers resale cost or rebuilding cost. Rebuilding usually provides better coverage, but is more expensive.
Basic homeowner's insurance does not cover the contents, though you can often add it for an additional fee or buy it separately. When buying contents insurance, consider whether it covers replacement value or fair market value. Replacement value is a better buy because it pays to buy a new piece of furniture or appliance, not what your old one is worth.
Consider also buying liability insurance which covers you if someone sustains an injury or other loss on your property.
Renters and condominium owners need only contents and possibly liability insurance. Many companies have policies tailored to these purposes.
APPLIANCE PROTECTION
Don't buy any extended warranties or protection plans when you buy small or major appliances. These plans are pure profit to the appliance stores. That's why the salespeople, push them so hard, especially if they are on commission. They usually cover only periods when very little is likely to go wrong and have numerous exclusions.
Insurance is a complex subject. Do your own research or work with your agent. Hopefully this introduction will help you do that more effectively.
Quoted from : essortment.com
