Insurance is a way of protecting yourself, your family or your business from financial loss by transferring or distributing risk. The entity providing insurance is known as the insurer while the one receiving insurance is the insured. The person seeking insurance pays the insurer in exchange for a promise of compensation in the event of loss. There are many types of insurance one can take depending on their financial status and preoccupation. Here are 10 cost-effective types of insurance.
10. Fire Insurance
Fire insurance is a type of property insurance that covers damage caused by fire. The insurance policy would cover the cost of replacement and reconstruction of the property razed by fire or even cash reimbursement. The insurer can only cater for the damage set by the policy. This depends on the amount and frequency of payouts made before the fire.
9. Free From Particular Average
Free from Particular Average is an insurance clause most used in marine insurance. It outlines what the insurer cannot cover in case of damage or loss. Marine insurance requires FPA clauses because it covers a cluster of property owners; the ship and the cargo. Many events can occur at sea that are out of control even for governments.
8. Life Insurance
This form of insurance guarantees payment of death benefit dues to certain beneficiaries upon the demise of the insured. People usually take life insurance as a form of financial security for their families. When they die suddenly, as death is known to occur, their children, spouses or next of kin will receive the benefits.
7. Personal Insurance
This type of insurance provides security to you or your family as a result of loss incurred during events such as illness, injury and permanent disablement that takes away your ability to earn a living.
6. Property Insurance
This insurance provides property protection coverage to property owners and property dwellers in case of damage of any kind, theft or injury of persons while in the property. Some of these damages include fires, floods, earthquakes, and many other accidents or natural disasters. The policy can cater to repair or it can be reimbursement in the form of cash.
5. Term Insurance
This is a type of life insurance that has term limits. It provides coverage for a period of time specified in the policy, usually in years. Death benefits will only be paid if the insured dies within the term specified in the policy.
4. Property Insurance For Home
Property insurance for Home is a specified type of property insurance policy. It is also known as home insurance and it only covers a private residence. The property being insured against damage or loss must belong to the insured.
3. Endowment Insurance
This is another type of life insurance policy that pays the insured or their next of kin a lump sum after maturities or upon death. Normally the maturities are divided into time intervals of five, ten, fifteen or twenty years. The benefits can also be paid out in case of grave illness as the policy outlines.
2. Health Insurance
This insurance coverage pays for medical expenses incurred during illness or medical procedures. The policy can also reimburse the insured the expenses they incurred after illness or medical procedures. The premiums paid out can be partly covered by the employer and the government.
1. Whole Life Insurance
Whole life insurance is a type of life insurance that has no term limits. It affects the deductions of premiums throughout the entire lifetime of the insured. It can only be terminated when the insured fails or is unable to maintain premium payouts. The death benefits are paid to the listed policy beneficiaries upon the insured’s death.