Insurance: What Is It? And What Types?

From an economist's perspective it is a form of risk management. This means that you foresee a possible risk that could be very damaging if you don't have the adequate funds to cover it at that time so you transfer that risk to another entity expecting them to take care if it. You in turn pay them an amount, usually monthly, to offset that risk from yourself. So you realize that you might have a car accident sometime and you don't have the full amount to cover a new car and any doctor bills or hospital bills that the accident would incur so you make a deal with another entity, the insurance company, to pay that for you. You in turn make monthly payments to them. Now you make these payments regardless if you every need to make a claim. If you have been in multiple accidents than chances are automobile insurance is something you know you need. If your like me where you haven't made a claim in over 16 years then you might feel like you have simple given money away each month for nothing.

There are so many types of insurance available now, some are law, some are worth it, some are not. If you live in America than you know that anytime you buy a car and have to use a loan to buy it then you must have automobile insurance. It is law to insure your automobile mainly for the safety of others, in the event that you injure another person while driving your automobile they will be able to receive the help they need from your insurance company. Medical or health insurance is more a personal benefit. If you have medical insurance and have a medical need than your insurance company will assist with it, in turn for your monthly payments. It is not a law that all must be insured with medical or health insurance.

People have used different methods of meeting their medical financial obligations most use health insurance, some use medical savings accounts, others try to use cash only. Another type of insurance is homeowners insurance. This, like automobile insurance, is mandatory with the purchase of a home with a loan. This usually rolls fire insurance and other requested types of insurance into it (such as earthquake, flood, etc.). This is also a personal benefit to have if your home is damaged by something covered under your policy then the insurance company will assist financially in having it repaired. There are many other types of insurances out there not all are worth your money to pay for though. There is renters, life, crop, business, home owners, travelers, auto and many other insurances available to the public, but not all are necessary or recommended for everyone.

If you can reasonably see a need for a type of insurance in your life now and in the future than it is worth looking into. If it will truly help you out financially and personally then see what plan would work best for your needs and ability to pay the premiums to the insurance company.

For more information regarding insurance needs click here

Andrew is a Marriage, Family, and Human Development graduate who enjoys swing dancing, camping, fly-fishing, and other recreational sports which provide physical excercise and relaxation.

Source: http://ezinearticles.com/6351346

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