Insurance is important to individuals, families and businesses. There are many different types of insurance plans, which have many different uses.
One of the best known forms of coverage is life insurance. It is primarily designed to protect the dependants of someone should that person die or become physically incapacitated. The insurance will help support the spouse and any children and can be used to pay other expenses, such as the cost of a funeral. Payments will be made in the event the insured person dies of natural causes or is killed in an accident, although some areas are not covered. Payment would not be expected, for example, if the death was self-inflicted or the person was killed doing some exceptionally dangerous activity. Life insurance comes in different forms. Permanent plans are effective as long as the person continues to pay the premiums. Term life insurance will provide coverage over a specific period of time.
Health insurance is designed to pay for the costs of obtaining various health care services, including preventative care and the treatment of illnesses or injuries. Some types of insurance provide total payment for health services, while others pay only a certain amount of the total cost. Among the latter types of insurance plans, there are often deductibles or co-payments, which are “out-of-pocket” expenses that individuals must pay. Health insurance in the United States is largely handled by private companies, although senior citizens and those in lower income levels are covered by government-sponsored programs.
Insurance plays an important role in the motor vehicle industry. Insurance here can reduce the liability of drivers in the event of accidents that cause human casualties or property damage. Insurance will also help cover the cost to repair the damage of the driver’s own vehicle. Businesses in general have liability insurance to protect them from financial damage in case harm comes to their customers or employees. Homeowners use insurance to protect their properties and possessions in the event of fire, storms, vandalism or other unforeseen events. Coverage for such high profile disasters as earthquakes and floods are usually purchased separately.
There are other more exotic forms of insurance that provide coverage in the event of everything from terrorism to alien abduction. The key to any type of insurance is pooling the costs among those who buy into the plans so that funds will be available to cover the losses that some of them will experience.