In our everyday lives, we sometimes hear about insurance policies. But do we understand what they are, their different types and most of all, what they protect? Before you are ready to purchase any of those kinds of insurance, it is best to first be informed about what they are and what benefits they can give to you. Knowing this information can help you choose the types of insurance that are suitable for your needs.
Insurance is, simply put, a promise to be compensated for a specific future risk, danger, injury, or loss at an uncertain time, in exchange for a payment. It is a special kind of contract which involves an insurance agent and his/her client, and a form of risk management designed to protect the financial security of the latter. A client who has purchased an insurance policy is called policyholder.
1. Life insurance
2. Health insurance
3. Property insurance
4. Auto insurance
5. Disability insurance
Disability insurance is similar to life insurance in some ways. About 10% of Americans experience accidents or illnesses that leave them unable to work for a prolonged period of time.
You might be able to support your family with your own savings while you are recovering from an accident or illness during a shorter amount of time. However, disability insurance will be able to support you while you’re recuperating for sustained periods of time.
Usually, disability insurance replaces only half of your income. But this is still better than not having any financial support at all when you become unable to work due to your disability. It is best to be responsible with your finances and to save up whenever possible while you’re still healthy to ensure your financial obligations will be met if you should become disabled.