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6 Important Insurance Policies Everyone Should Know

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Important Insurance Policies Everyone Should Know – Having an insurance policy is very important for every individual and business and this is because you cannot predict future event and so you will need to have a cover against risk. Insurance is a strong and reliable financial plan that will help act as a succor in time of unplanned events.

Many people don’t understand the importance of insurance while some others don’t the right information about the type of insurance plan to have and this has discouraged a lot of people from having an insurance plan and living their lives without proper back up.

Well, that is why we are here. This article is going to enlighten you about insurance and also the main insurance policies you should know about. You should also know that there are other insurance policies aside the ones we will be discussing in this article and the insurance policy you go for depends on your need. But these five insurance policies we will be discussing are the top insurance policies you should know about.

Before we proceed, let’s look at what an insurance policy is.

What Is An Insurance Policy?

An insurance policy is a contract between an insurance company and an insured person or policy holder promising to pay or compensate the insured person for loss caused by damage under that insurance plan.

An insurance policy is tailored to meet a particular need and compensate for a particular loss or damage and the policyholder would have been paying some amount of money called premium.

With the insurance policy, the policyholder is being indemnified by the insurance company against specific loss or damage.

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6 insurance policies you should know about

  • Health Insurance

This is one of the most popular insurance policies and it is obvious why people have health insurance; health is really important and with the rising cost of medical care, many people have seen the reason to have this health insurance.

Sometimes, the more serious your injury, the higher the cost of your hospital bill and don’t you think it will be better to have a coverage for these unplanned health issues?

The cost of having health insurance might be high and seem like a financial burden to you but the truth is it is better than not having any health coverage as the cost of not having health coverage is higher.

If you are an insured person and you meet with an accident or diagnosed with a severe ailment, be sure that the insurance company with which you got the insurance policy will bear the expenses.

  • Life Assurance

This is an insurance against the death of a person and the thing is that this insurance is not really given to you but to your beneficiary after your demise. In a nut shell, it protects the people that are financially dependent on you.

If you don’t want your children, spouse or other loved ones to be financially tortured by your death, then life assurance should be among the insurance policies you should have. It acts as a succor to your family members especially if you are a bread winner.

You should purchase a life assurance to replace the income you earn so that in the event of your untimely demise. It can also help in covering the burial cost too so your family members are relieved from that burden.

  • Homeowners’ Insurance

Having to replace a home can really be expensive and this is why you need to have a homeowner’s insurance especially if you have a home of your own. This coverage will cover for the replacement of the structure and contents of the home.

You should know that the cost of rebuilding the house doesn’t include the cost of the land because the land is yours. Also, the cost of replacing the house could be more or less than the price you paid for it depending on the age of the house and the contents too.

Make sure your home insurance covers cost of any liability for injuries that might occur on your property.

The home insurance is not limited to only house owners as renters can also have insurance for the house they live in; it is called the renters insurance. This renters insurance covers the personal assets or properties of the tenant of a house. It could include additional living expenses, liability, medical payments and any other dwelling cost.

So you see that whether you are a house owner or tenant, you will need to have an insurance policy to cover you in case of loss incurred.

  • Automobile Insurance

This is for those that have vehicle and it is a law in most countries like Canada for instance. This insurance is something you shouldn’t skip regardless of the kind of car you are driving. The insurance will cover you in case of injuries from accident, the vehicle and also damages caused to others by your vehicle so you shouldn’t neglect this insurance policy.

If you don’t have a vehicle insurance policy and you are involved in an accident where someone is injured or their property is damaged, you may be subjected to a lawsuit where you could lose everything you own.

The cost of having vehicle insurance is not as expensive as the cost of not having this insurance policy as it puts everything you own at risk when an accident occurs especially a tragic one.

  • Long-Term Disability Insurance

People tend to ignore or get discouraged about purchasing this insurance policy because of the cost but it is a very important insurance policy to have owing to the fact that you cannot predict what happens to you in the future and how your life can turn out to be. Nobody wishes for something bad to happen to them but you can actually prepare for it.

This insurance policy is coverage to protect or cover you in a situation where you are unable to work due to illness or injury caused by accident. With this insurance, you will be able to take care of yourself for a long time even when you retire from active work.

The long-term disability insurance will cover you for as long as five to ten years and even to the time you retire. With this insurance policy, you will be able to continue enjoying your current lifestyle even when you can no longer work.

  • Business Insurance

The rate at which entrepreneurs are entering into the market has made this insurance policy an important one and if you have a business, you wouldn’t want to neglect this insurance policy.

This is an insurance policy to protect your business from loss due to events that occurs when carrying out your normal course of business. If you own your own business, you will have to take up a business insurance policy. Depending on your business, you will have to take up an insurance policy against property damage, employee-related risks and law suit.

Some Frequently Asked Questions About Insurance

  • What Is A Universal Life Insurance Policy?

This is more like a permanent life insurance that allows the policyholder to invest their cash value in a separate account which features funds that are tied to the stock market. This policy is flexible and so the premiums and death benefits can be adjusted.

  • What is an Umbrella Insurance Policy?

This is a liability insurance that provides additional coverage in cases where the policyholder has reached his current policy limit. Meaning that if the damages incurred exceeds the policyholder’s current insurance and so the umbrella insurance will give him cover.

  • What is a Whole Life Insurance?

This is a permanent life insurance policy just like the Universal Life Insurance but the death benefits here are paid upon the death of the insured. The whole life insurance policy remains in force for the life of the insured provided the premiums are up-to-date.

Also, in this policy, you build cash values which can be accessed during your lifetime as the insured.

  • How do you cancel an insurance policy?

If you want to cancel an insurance policy as a policyholder, you will have to do this according to the cancellation provisions of the contract with the insurance company.

Depending on how the insurer wants the contract to be cancelled, it mostly required to the done in writing and you must also give notification beforehand.

Final Note

Everything in life is a risk and so losses are something we cannot run from and this is why it is paramount that we have a form of cover against the losses that come with risk in our everyday life. This cover helps to lessen the impact of these losses by acting as a succor.

From what we have discussed so far, you can see that insurance is something you shouldn’t do without and we have highlighted about six insurance policies that you should have.

You can consider using the service of an insurance broker as they have in-depth information about insurance and they will help you find the best insurance policy that suits you. You should be in control of your protection by being well-informed in order to make a decision.

READ ALSO: How To Renew Your Canadian Passport

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