Understanding The Different Types Of Insurance Policies


Insurance ensures that you, your loved ones, and your property are financially protected in unfortunate times like sickness, accidents, or death. That’s why you must consider getting an insurance policy to give you peace of mind.

But before you start applying for insurance, you must understand the different types available in the market. This way, you will know what type of policy you need. So, without further ado, let’s review each insurance policy you can apply for.

Health Insurance

The first health insurance we will discuss is health insurance. In America, hospital bills are among residents’ common financial hardships. Even if you think that you’re still young and healthy, the chance of you being hospitalized is still significant.

For example, during the COVID-19 pandemic, young and healthy people became infected with a virus and were hospitalized. That’s a great example of how unpredictable our health is. This policy offers assurance to the policyholder that they will have financial assistance when a health emergency arises.

The contract between you and the health insurance company covers medical expenses, such as hospitalization, if you get ill, have an injury, or get into an accident. When applying for health insurance, you might face the dilemma of choosing from options of HDHPs or High-deductible Health Plans and PPOs or Preferred Provider Organizations. But keep in mind that HDHP has a high deductible compared to traditional health insurance plans.

There’s also a lesser-known option: zero deductible health insurance. It can benefit individuals who expect to incur significant medical expenses due to procedures like long-term care or surgery. However, its higher upfront costs make it less popular than other plans.

You can check with agents to learn more about these options. It’ll help you decide whether these are viable for you.

You can acquire a health insurance policy from your local insurance company or through your employer. However, starting shopping for an insurance company that suits your needs is highly advised.

Life Insurance

The next insurance policy that is available on the market is life insurance. Life insurance is a safety net for your loved ones when you pass away. Your life insurance contract assures that your beneficiary will get paid a lump sum when you pass away in exchange for your premium payments.

Having life insurance can provide you with peace of mind, knowing that your loved ones will not face financial struggles when you die.

Life insurance is categorized into two categories: Permanent life insurance and term life insurance. Permanent life insurance, like universal or whole life insurance, offers lifetime coverage. Most permanent life insurance can accumulate your payments as cash value, which you can access even while you’re still living.

Term life insurance, on the other hand, offers protection for a certain period. This life insurance plan is the cheapest option.

Home Insurance

Home insurance is a policy that protects the policyholder’s property. It covers damages and losses to your residential home and its furnishings. This plan also covers four different incidents that might happen to your property. These incidents are:

  • Interior Damage
  • Loss or Damage of personal assets
  • Exterior Damage
  • Injuries that occur within the property

Moreover, you must know that home insurance has a limit to its coverage. This limit determines how much your insurance provider will shoulder in case of an unfortunate event.

When you claim for any of the incidents mentioned above, you must pay a deductible, which is an out-of-pocket expense.

Renters Insurance

If you are renting your home, you need to know that there’s an insurance policy that is made for people like you. The renter’s insurance is a policy that covers different types of losses, such as fire and theft.

If you don’t acquire renters insurance, you will be responsible for replacing your belongings if they get lost or damaged. Remember that even though your landlord has landlord insurance, it won’t cover your personal belongings. It’ll only cover the loss of the structure.

So, if you want to have peace of mind while living in an apartment or condominium, you must get renters insurance.

Disability Insurance

Disability insurance is a type of insurance that provides compensation if you can’t work or earn an income due to disability. United States residents can acquire disability insurance from the Government through the Social Security System.

However, you can also purchase disability insurance from a private provider. What you must know before you get disability insurance is that the requirements are strict, such as your medical history.

You must also prove that your disability is so severe that it stops you from earning an income in any way. This is true, especially if you apply for disability insurance from the government.

Some private providers only ask you to prove you can no longer perform your previous work. So, it’s advised that you compare providers first before applying for disability insurance.

Auto Insurance

Auto insurance is required if you own a vehicle in the United States. Driving around with an uninsured vehicle is against the law. Not only that, but it’s illegal to drive an uninsured vehicle. You can also experience financial struggle if you get into a vehicular accident, especially if you are at fault.

Most of the auto insurance offered in the market offers coverage for injuries and vehicle damage that results from an accident.

Furthermore, if you get liability car insurance, the policy will also cover your legal expenses on top of paying for your injuries and car damages. Since this type of insurance is required if you own a vehicle, you must choose the most suitable policy.

Long-Term Care Insurance

If you are approaching age 65, you must consider getting a long-term insurance policy. As you age, your health deteriorates, and when you reach the age of 65 or above, you will need long-term care.

Whether it’s in-home care assistance or a stay in a nursing home, your long-term care insurance will cover it. Remember that long-term care is expensive, and having long-term care insurance can greatly help.

Final Words

Life is unpredictable. You don’t know when you’ll get sick or get into an accident that can hurt your bank account. Having insurance is a huge relief in this situation. That’s why you must acquire insurance suitable for your needs by using the information above as a guide.

Share this on


About the author

Related Articles

Scroll to Top