What Are the Different Types of Insurance?

Written by S. Danilina and Fact Checked by The Law Dictionary Staff  

The person’s financial future can be affected by different circumstances that he or she cannot control or predict; thus, it is important to know about different types of insurance available that can help protect someone’s financial security in the event of asset losses, loss of income or even death.

The following main types of insurance are available today:

Life Insurance

Life insurance is designed to provide a financial security to the family of a policy holder in the event of his or her death. Different types of life insurance are available to obtain nowadays. The most common ones are term life insurance and whole life insurance. A term life insurance is easily affordable but only covers an insured person for a specific length of time. On the other hand, whole life insurance is more expensive but provides coverage for the entire life of an insured person. Often, life insurance policies have exclusions to their coverage, such as pre-existing conditions. Make sure to go through all details of your policy with your insurance agent.

Health Insurance

Health insurance generally covers medical expenses for health related issues that an insured person experienced.  Health-related insurance comes in many plans:

-     Major Medical Insurance plans cover a hospital, drugs and doctor’s visits bills. Major medical insurance plans usually comes in the group or individual health plans. Group health plans are usually provided by a person’s employer. Group health plans are usually cheaper and cover more expenses. An individual health plan is a private insurance and should be purchased entirely by a covered individual. Individual health plans are more expensive and provide less coverage than group health plans.

-      Limited benefit plans are designed to cover an insured person for a particular health care setting or disease, such as:

1.            Basic Hospital Expense Coverage provides coverage for a period usually not less than a month of continuous in-hospital care and specified hospital outpatient services.

2.            Basic Medical-Surgical Expense Coverage provides coverage for a required surgery and also includes a certain number of days in-hospital care.

3.            Hospital Confinement Indemnity Coverage provides a fixed amount coverage for each day that a person spends in a hospital.

4.            Accident Only Coverage provides medical coverage in the event of disability, death, an accident or dismemberment.

5.            Specified Disease Coverage provides coverage to diagnose and treat a specific illness, such as leukemia, for instance.

 

-     Other Limited Coverage plans include dental or vision plans.

-    Additional coverage plans provide extra protection for a person who becomes disabled and requires long-term care or Medicare enrollment. These additional coverage plans include disability income, long-term care insurance and medical supplemental coverage.

Property Insurance

Property Insurance includes homeowners or rental insurance. This type of insurance covers a person in the even his or her house or a rental apartment has been damaged by fire, flood, earthquake, theft and etc. Apartment complexes often require their renters to buy rental insurance before they can move-in day.

Auto Insurance

Auto Insurance is one of the most popular types of insurance. A car may easily be one of the most expensive items a person owns. If your car is stolen or damaged in the accident, it may be very costly to repair. Auto insurance will pay to repair or replace a car if an insured person gets into an accident. Comprehensive motor vehicle insurance is considered to be the most common insurance policy that covers an insured person for loss, theft or damage to his/her vehicle. The cost of auto insurance will vary depending on a driver’s age, claims history, the make and type of car.

Other less common types of insurance plans include travel insurance, bond insurance, accidental death insurance, crime insurance, loan protection insurance, casualty insurance, deposit insurance (FDIC) and many others.

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