How Does Insurance Work?
Friends welcome to my site, my today topic is:
what is insurance?
Insurance is a way to manage your risk when you buy the insurance you purchase protection against unexpected financial losses, the insurance company pays you or someone you choose, if something bad happens to you if you have no insurance and an accident happens you may be responsible for all related costs, having the right insurance for the risk you may face can make a big difference in your life ensure an insurance policy is a written contract between the policyholder the person or company that get the policy and the insurer.
The insurance company the policyholder is not necessarily the insured an individual or company may get an insurance policy making then the policyholder that protects another person or entity who is the insured for example when a company buys life insurance for an employee the employee is the insured and the company is the policyholder.
How does insurance reduce your financial risk imagine you are driving your car and you hit a deer which damages your car if you have the right to kind of auto insurance policy the insurance for the company will pay the cost of the car repairs minus the deductible the portion you have to pay, now imagine a water pipe brought in your bathroom ruining everything in the room and the bedroom next to it too, next to it typically? if you have homeowners or renters insurance that insurance company will pay to replace some or all of the damaged property.
Once you pay your deductible insurance policies will only pay for things that are described in the policy so it's important to read a policy carefully before you buy it, so you'll know exactly what's covered how does an insurance policy work, insurance policies are often in place for a specific period of time this can be referred to as the policy term at the end of the term, you need to renew the policy or buy a new one when you buy an insurance policy part of your responsibility include includes paying a fee called a premium some premiums are paid monthly like health insurance others may be paid once or twice a year like auto insurance or homeowners insurance, the cost of your premium generally depends on how much of a risk you are the insurance company in addition to the premiums most insurance policies include a deductible that's the amount you have to pay first before the insurance company pays their share.
for example, if you have a five-dollar deductible on your homeowner's policy and a storm causes thirty-three uh dollar three hundred thousand dollars in damage you will pay 500 and your insurance company will pay 2500 with some policies you can choose your deductible usually a higher deductible means a lower insurance premium.
what are common types of insurance?
There are many types of insurance but some common types are described here:
Health insurance
Helps you pay for doctor fees and sometimes prescription drugs once, you buy health insurance coverage you end your health insurer each degree to pay a part of your medical expenses usually a certain dollar amount or percentage of the expenses.
Life insurance.
Pays a person you select a set amount of money if or when you die the money from your life insurance policy can help your family pay bills and cover living expenses disability, insurance protect individuals and their families from financial hardship when illness or injury prevents them from the earning a living many employers offer some form of disability coverage to employees or you can buy an individual disability insurance policy.
Auto insurance.
Protects you from paying the full cost of vehicle repairs and medical expenses due to collisions in most states the law requires, you to have auto insurance when operating a motor vehicle.
Homeowners or renter insurance.
Protects your home and personal property against damage or loss and ensures you in the in case someone gets hard while on your property if you have a mortgage on your property most lenders require you to have homeowners insurance as a condition of the loan what should you consider when buying an insurance policy a useful rule to live by is to do your homework before you buy insurance research any insurance company you are thinking about buying from to be sure that the company is financially sound and provides good service also find out what factors matter.