INSURANCE POLICY – Here is the definition, benefits, types, and coverage of this financial plan that you need to know.
Insurance is a financial safety net that helps protect individuals, families, and businesses from unexpected financial burdens. While the world of insurance may seem complex at first, breaking down the basics in simpler terms can make it more accessible to everyone.
It is a contract between you and an insurance company. You pay a regular amount, known as a premium, to the company. In return, the company promises to provide financial assistance if certain unfortunate events occur.
Imagine you have car insurance, and unfortunately, you get into an accident. The repair costs are significant, but because you have insurance, you won’t have to pay the entire amount out of pocket. Instead, you’ll pay a smaller portion, known as a deductible, and the insurance company covers the rest.
TERMS
Premium – Its like a subscription fee you pay to the company. It’s the cost of your insurance coverage, and you typically pay it monthly or annually.
Deductible – When you make a claim, the deductible is the amount you agree to pay out of your own pocket before the insurance kicks in. It’s like sharing the cost of repairs or medical expenses with the insurance company.
Claim – A formal request to the insurance company for coverage or compensation.
TYPES & Coverage
Life Insurance
In the event of your passing, life insurance provides a lump sum payment to your beneficiaries. It helps your loved ones financially when you’re no longer there to support them.
Health Insurance
Medical expenses such as doctor visits, hospital stays, and prescription medications. It ensures that you can afford necessary healthcare without facing significant financial strain.
Auto Insurance
Damages to your vehicle or someone else’s vehicle in the case of an accident. It protects you from the financial fallout of car accidents and is often required by law.
Homeowners/Renters Insurance
Your home and personal belongings against damage or theft. It safeguards your investment and possessions, providing peace of mind.
Property Insurance
Buildings and contents against various risks, such as fire, flood, or natural disasters. It helps you recover financially if your property is damaged or destroyed.