Insurance acts as a shield to help protect one from losses incurred from unforeseen circumstances. The importance of insurance cannot be overemphasized as it is not only a means of safeguarding the interest of people from loss and uncertainty but also helps to secure future goals and aspirations. The world is full of risks and uncertainties, where families, individuals, businesses and properties are exposed to different dangers such as; car accidents, fire outbreaks, illness, debt, death and many more. Even though insurance cannot take away the pain that arises from these situations, it can help reduce or eliminate the effect of such loss by providing for compensation through financial resources.
What Is Insurance?
Insurance is a legal agreement between two parties where the insurance company (insurer) promised to indemnify the individual (insured) on the happening of the insured contingency. Events which result in losses such as death of the insured or damage to property is regarded as a contingency and it is called a contingency because there’s an uncertainty in the likelihood of such an event to happen. The insured also known as policyholder pays a premium either monthly or annually in exchange of the insurance company's promise to provide cover against risk of financial losses that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.
Types Of Insurance
Insurance companies offer a myriad of choices when it comes to insurance policies and the type of insurance you should go for is dependent on what you wish to protect. This could either be a life, business or property. Here are different types of insurance policies you can get.
“if a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance”-- Suze Orman. This quote buttresses on the importance of life insurance as it provides financial security for the insured's family in case of his or her untimely demise. Life insurance is particularly important if you are the breadwinner of your family or if you shoulder the higher percentage of responsibility when it comes to finances in your family. The insurer or insurance company will pay a fixed amount of insurance at the time of death or at the expiry of a certain period. In exchange, the policyholder pays a regular premium to the insurance company.
Health insurance helps cover the cost of medical treatment for you and your family as the responsibility of handling the expenses of the medical treatment of the insured person(s) is transferred to the insurance company. According to Jan Schakowsky,
“Without health insurance, getting sick or injured could mean going bankrupt, going without needed care, or even dying needlessly.”
Although you might be feeling hale and healthy at the moment but as with almost everything in life, nothing is certain and you can’t be too sure you or a member wouldn’t have an illness that might demand expensive medical care. Transferring this responsibility to an insurance company would not only give you an assurance that the treatment expenses would be covered but also ensure that you don’t go bankrupt as a result of expensive medical costs.
You can either buy a generic health insurance policy or a policy for a specific disease or illness.You should know more about health insurance before getting one.
Dental insurance is a form of health insurance policy that caters for costs associated with dental care. Dental insurance policies cover maintenance such as; scale and polish, check-ups, and X-rays as well as treatments such as fillings and root canals. Dental insurance policies also cover cosmetic dental work such as; teeth whitening. There are several different types of individual, family, or group dental insurance plans which you can choose from depending on what suits you best.
General insurance revolves around liability, property and other types of insurance that doesn’t involve life insurance. The purpose of general insurance is to help cover for losses that arise from damages to tangible assets. A premium is paid to the insurance company on a regular basis to provide protection from unforeseeable contingencies.
Travel insurance policies cover for unforeseen losses that arise in the process of traveling, either locally or internationally. A 2020 NerdWallet survey of 2,000 Americans reported that only one in five Americans bought travel insurance for leisure trips prior to COVID-19. But 45% say they’re likely to purchase travel insurance for future leisure trips and this suggests that people are starting to give more priority to their safety and situations that could arise from unpleasant contingencies. Basically, the insured gets cover from emergency medical expenses, coverage for trip cancellation, lost luggage, flight delays, replacing lost passports, cash wire assistance, public liability, and other expenses. For more information, find out why travel insurance is worth it.
Car insurance also known as auto insurance is one of the most common and compulsory types of insurance and anyone using a motor vehicle on the public highway must have it. Auto insurance is designed to protect the insured for loss of or damage to his/her vehicle, damage to Third Party property including bodily injury and death to Third Party caused by an accident whilst using their vehicle.
Homeowners insurance covers for losses, destruction or damages of an individual’s home or furnishings within the home. The policy usually covers interior damage, exterior damage, loss or damage of personal assets, and injury that arises while on the property. It also helps indemnify the policy holder from liability for damages to someone else’s property or medical bills in case of injuries. Read this Homeowners Insurance guide for in-depth information.
Renters insurance provides cover for damages that occur to a tenant’s property from hazards such as; fire-outbreak, theft, vandalism or natural disaster. It also provides liability insurance for the insured from actions that lead to damages of third party property. A major reason why it is important for tenants to obtain renter’s insurance is that the owner of the building is responsible for insuring the dwelling itself but bears no responsibility for the tenant’s belongings. Rental insurance is available for you if you are renting or subletting a single family home, apartment, duplex, condo, studio, loft, or townhouse.
For most households, pets are regarded as a member of the family so when some of our favorite pets fall sick or are injured it can become very upsetting and disturbing especially for the kids. Vet bills are usually very expensive and could cause a serious headache especially when your pet unexpectedly requires immediate medical attention. Getting a pet insurance policy would help cover for such expenses. Pet insurance policies also provide for check-ups, liability cover, advertising costs and kennel or cattery fees (should your pet need to stay for recovery).
Tips To Find The Best Insurance Company For Your Needs
Buying an insurance product can be overwhelming as the numerous clauses, conditions and definitions can easily confuse you. And with everything going fine for you, you might not really see a need to obtain an insurance policy. Despite this, life could be hell if you lose all your properties to a natural disaster or theft and you are left without an insurance plan to help you get back on track. No one wishes for bad events to happen. However, it is always a smart choice to prepare for the worst and hope for the best.
With the number of insurance companies continually growing from year to year, here are tips on how to filter the bad ones and get the best for your needs.
Research The Company’s History And Reputation
Researching an insurance company's history will not only give you an idea on what to expect from them but also help you understand the kind of products they sell, their vision, mission and values. You can conduct a quick research on an insurance company by visiting their website or checking out reputable review platforms such as; Collected.Reviews, to get independent reviews of previous customers of any insurance company you are researching. This would help you make informed decisions and guide you in deciding whether or not an insurance company serves your purpose.
Understand The Insurance company’s Financial Strength
This is a very important factor to consider before purchasing insurance products from any insurance company. You want to be sure the insurance company has robust financial strength to deal with contingencies and that you’ll always be able to get your claim without any issues from your insurer. Read this article about insurance companies to find out why.
Although price is a necessary factor to consider before purchasing insurance products from any insurance company, however, it shouldn’t be the most important. This is so because most times, you get what you pay for and this means lower price of an insurance product could result in less coverage of losses when it matters the most. It is very important for you to have a full understanding of the clauses, exemptions and coverage of your insurance policy so as to ensure that you aren’t stranded on rainy days. Many people stick with a preferred provider regardless of price. There is nothing wrong with this; However, if you are not loyal to one company, you may find it worthwhile to compare providers and premiums. You might be able to get a similar policy for much less somewhere else.
Insurance Terminologies You Should Know
This is a legal agreement between an insurer and the insured. The contract determines the claims which the insurer would cover.
This is the amount of money an individual pays for a policy either monthly or annually.
This is a person who evaluates and analyzes risks in insuring people, assets and properties.
Insurance quote is an estimate of premium for the insurance coverage you selected and is subject to change depending on the information you entered at the time of the quote.
An insurance agent helps clients choose insurance policies that suit their needs. They work for the insurance company and sell insurance products to potential clients.
Conclusively, investing in an insurance policy is a very important aspect of financial planning as it helps shield you from financial hardship when you incur unexpected losses. Be it life insurance, health insurance, liability insurance or auto insurance, no one really needs insurance until you need it and you will be relieved at how much this smart action from you can help you during rainy days. In the words of Michael Bennet, “To protect our country’s economic future and the health and well being of all Americans, we must find a way to rein in out-of-control costs, provide quality, affordable health care choices to all, and make outrageous insurance industry abuses a thing of the past.”
This quote gives an insight on why It is important to thoroughly research a variety of insurance companies to find out which deal suits you best. You should also consider the benefits you get from the policy, and your ability to pay the premium.