Insurance refers to the process in which one protects either themselves or property against damage that is unforeseen. It can happen through an accident such as fire or even death. Below are the main types of insurance policies;
1. Life Insurance
Life insurance is a signed contract that clearly shows that the policyholder is insured against death or accident. There is a specific amount of money known as the sum assured that is payable to the family if death occurs to the insured person. The amount given is expected to cater to funeral expenses and the family may receive the lump sum amount. It is either term or whole life insurance where one can take it for a specified number of years or for the whole life on earth.
2. Health Insurance
Health insurance is a policy that covers health in general. Premiums paid may differ in terms of how chronic the disease might be and some of the benefits one should receive if they are under that specific cover.
3. Property Insurance
Property Insurance is a type of insurance where individual assets such as buildings and land are insured. These assets are taken care of from unforeseen damage such as fire outbreaks or theft. However, insurance companies do not take care of natural-related calamities such as floods and earthquakes.
Automobile insurance is a type of insurance whereby a policyholder pays premiums for their motor vehicles. Through this, they are insured against accidents involving vehicle collisions while on the road.
Disability Insurance refers to the insurance that covers a person in case an accident occurs and that hinders them from performing their normal daily activities. The disability covered could be long-term or short-term.
Advantages of Insurance
- Provision of security over unforeseen future happenings that may lead to loss or damage of property or person.
- Insurance promotes a vice of saving money or using items sparingly. This way people are disciplined.
- It is a source of income as many people are employed to create awareness of the existing policies that one should consider.
- Insurance promotes the spread of risk meaning the risk is shared among a large number of people through the payment of premiums.
- Insurance promotes trade among people from different parts of the world. There is the freedom that comes along when one is fully aware that their property has been insured against a certain risk.
- Some insurance policies can be expensive and this is a hindrance to many in acquiring them.
- Some insured personnel take advantage of the covers and pave the way to fraudulent cases in acquiring money.
- Insurances are limited to cover most losses that happen to an individual or an organization at large.
- Premiums charged might go high as years progress making them inaccessible to previous policyholders.