Types Of Insurance

TYPES OF INSURANCE.

Insurance is a form of contract between an insured and insurer to protect the insurer from financial losses in case of risks. The insured usually pays premiums to the insured. The amount and frequency of the premiums depend on the agreement between the insured and the insurer. Insurance companies, however, offer different types of insurance to their clients depending on their needs. One of the most common types is life assurance. One can either choose an endowment policy or whole life policy. In the whole life policy, the beneficiaries of the insured are paid upon his/her death. In the endowment policy the policyholder is compensated at the expiry period if he/she is alive. However if the insured dies before the expiry of the contract, the beneficiaries are paid.

Another type of insurance that is common is health insurance. No one is ever sure when illnesses will come knocking, and an insurance cover for you and your family can be vital. Insurance policies vary according to the insured needs. Some have chronic illnesses, and they, therefore, pay higher premiums than those who rarely get sick. Motor vehicle insurance is also another type of insurance. There are several policies which are available. They can cover the car against damages in accidents or theft and other road users in case they sustain injuries in crashes involving the insured vehicle.

Most people would like to earn their income, but sometimes particular circumstances may change that. Disability insurance, therefore, comes in handy in such instances. In case one becomes disabled and is unable to work either due to a disease or an accident, the insurance company compensates him/her what he/she could have earned when they are unable to. It may cover temporary, partial or permanent disability. Institutions that deal with money such as banks have insurance plans such as cash in transit insurance. This plan insures money which is being transported by the company from one place to another.

Another common type of insurance is general insurance. It is quite extensive and can be classified further into property, marine, fire, social insurance among other forms. Under property insurance, the insured insures property against perils such as theft, fire or water damage. In marine insurance, both ships and cargo are insured against marine risks. Marine risks may include collision with other ships, pirate attacks or fire. Social insurance aims at protecting the vulnerable in the society such as the aged and sick. It can be in various forms such as unemployment benefits, pension plans, and disability benefits. Fire risk basically insures against fire damage. The insurance company compensates losses incurred due to fire.

There is also another type of insurance known as professional insurance. This kind of insurance covers professionals who offer services to their clients. If a doctor makes an error while treating a patient, the patient or his relatives can sue the doctor. The professional insurance cover will, therefore, protect the doctor. It is recommendable especially for doctors and lawyers to have this insurance. Liability insurance is also essential. It protects the insured against lawsuits that may arise due to injuries or accidents. For example, if a building falls and a passerby is injured the insurance company will cover the insured. Insurance is vital for everyone and all business entities.