Types of Insurance (Health, Life, Property, and Auto)

Most of us know of the concept of insurance, but what is it exactly?

When you possess something valuable that could be lost, and you can’t afford to pay for

its loss yourself, you can pay for insurance.

In the simplest terms, insurance is financial protection against losses.

If you want insurance, you usually have to sign a contract with an insurance company,

and that contract describes the specific policy meant to protect you in a crisis.

After you sign the contract, you have to pay a fee per month or year in order to remain

protected.

That fee is called a premium.

You may also be responsible for an insurance deductible, which is the amount you must first

pay before the insurance company starts to cover the costs of the policy claim.

Insurance companies may also limit what they pay out to you.

A policy limit is the maximum monetary amount that an insurance company will pay out in

relation to a claim.

In certain cases, it’s against the law to not have insurance.

This is essentially to force citizens to be responsible.

The minimum insurance one gets is often called liability insurance.

Liability insurance policies cover any legal costs and payouts an insured party is responsible

for if they are found legally responsible for damage.

So governments force you to have insurance when they think you might try to get out of

paying for damage that you clearly caused.

While there is a wide range of types of insurance policies available, in this tutorial we will

focus on the four most common types: health insurance, life insurance, property insurance,

and auto insurance.

Health insurance is insurance for medical and surgical expenses.

Because medical and surgical care is often necessary in order to stay alive, it is incredibly

important, but it can be expensive.

In addition to monthly premiums, policy limits, and deductibles, health insurance plans often

require coinsurance and copays.

Coinsurance is a percentage of healthcare costs that the insured must pay even after

they’ve met their deductible.

A copay is a fee that the insured must pay for certain services such as doctor visits

and prescription drugs.

Often the consumer can save money on their monthly health insurance premiums by enrolling

in a high-deductible health plan.

However, that can be quite risky if there’s an accident, as the insured would be responsible

for paying a large amount of money before their insurance benefits kick in.

Because healthcare costs have skyrocketed in recent decades, and because most people

view healthcare as a right instead of a privilege, citizens in most developed countries have