What is General Insurance?
Insurance policies can be divided largely into two categories: general insurance, and life insurance. The former, as you may have guessed, includes policies that cover all aspects of a person’s life and belongings. Car, medical, accident, travel – insurance for all these things is covered under General insurance.
What are the Benefits of General Insurance?
The aim of any insurance policy is twofold: reimburse you financially for any loss, and to give you peace of mind in case of a loss. For instance, the cost of any medical treatment can be prohibitively high. If you have a medical insurance policy, the company providing you with the policy has a liability to reimburse you partially for the cost of the treatment. This can often be more than 80% of the entire cost – a huge saving.
In some instances, insurance is mandatory. For example, you can’t drive a car in the US without owning an auto insurance policy.
What are the Common Types of General Insurance?
The most common type would be auto insurance, especially in the United States, where, as mentioned above, it is a necessity.
Health insurance is also very common across much of the developed world. In the United States, there is a big debate about extending it to all sections of the society – a practice that is prevalent throughout the Western world. This kind of insurance is especially beneficial as the cost of healthcare in developed countries is usually very high.
Home insurance is also very common and most homeowners have some sort of policy to cover their house in case of any damage. When you consider that the average cost of a house can run into several hundred thousand dollars, it becomes somewhat necessary to protect it against any kind of loss. Home insurance provides the perfect antidote, giving home owners peace of mind, as well as financial reimbursement in case of any damage covered under the policy.
Posts Tagged ‘ Life Insurance ’
Getting married is undoubtedly one of the busiest and most stressful times of your life. You have all sorts of arrangements to make and you have a deadline so you have to make them quickly. You probably can’t think of anything other than getting married to the person of your dreams and feel you can only afford to focus on your big day. Although this is understandable, and indeed expected, you also need to consider your insurance. Tying the knot will drastically change your insurance needs and options and you should try and sit down with your soon-to-be spouse and evaluate these carefully. Re-evaluating your homeowners, life and health insurance well before the wedding is definitely a good idea so when you come back from the honeymoon, your insurance needs are covered and you can go about “being married”.
Short-term insurance
When you get married, both your household contents will be covered under a single policy, but this is probably not the case before you say “I do”. If you are both insured by the same insurance company which is unlikely, you could simply move all your property on to one person’s policy. If not, it is wise to shop around for the best possible rate while retaining adequate cover. Getting married will change your risk profile and your monthly rate is likely to be much less, especially your vehicle insurance.
Health insurance
Similar to short-term insurance, married couples tend to pay less for health insurance than their unmarried counterparts. Most health insurance companies do not offer domestic partner cover and if they do, it is considered taxable income if you submit a claim. To that end, it is advisable for unmarried couples to have separate health insurance policies, but all that changes when you get married. Compare your policy to your partners’ and see which offers the best possible benefits for the lowest premium. It is also not a bad idea to shop around for a possible alternate insurer than either of you currently use.
Life insurance
Many consider life insurance the most important policy to consider, especially if you are starting a family. They will need to be protected in the event of either of your deaths and as such, this should be discussed well before the wedding. If you already have a policy in place, you would want to consider increasing the cover so that your loved ones are not left without a source of income after your death. If you have not already done so, you will need to change the beneficiary on your policy as well.
Ensuring that all your insurance needs are taken care of before you start your life together will not only provide you and your soon-to-be spouse with much needed peace of mind, it could also save you a few pennies on your monthly installments which is often very welcome.
After working in the insurance world for five years, I have become the poster add for the importance of being adequately insured. While not wanting to pay the exorbitant premiums myself, I have seen time and again how peoples whole lives could have been turned up-side down but due to adequate insurance all they had was inconvenience. Total a new car and suddenly those premiums seem inconsequential. Have your house burn to the ground and home owners insurance looks like penitence. Have a home robbery and again those premiums look like a great return on your investment.
Get a cancer diagnosis and all those years of outrageous premiums are not only life saving but mentally and emotionally saving as well.
While no one looks forward to paying for insurance, Bellevue insurance companies are ready and willing to help you find the plans that are right for you. No one plans on using their policies but at one time or another we all do. Some use more medical insurance other have more car accidents, whatever your circumstances the time will come when you will be very happy that you have those policies in place. A neighbor of our just lost her husband. It was a terrible sadness, he was the light of her life, I was staggered at the cost of a funeral and burial, fortunately for them they had wonderful life insurance. I can’t imagine how she would have copped with the death of her husband if she also had to be concerned with the cost of it. Over and over she expressed gratitude for good life insurance. Because life will continue to throw curve balls at us, newlywed or nearly dead, we all need to be properly insured as each policy is important.
The definition of insurance is a contractual agreement between an individual and a company which offers financial reimbursement in case of an accident or calamity. The insurance companies have compiled actuarial data about risks among their customers. It’s almost like a gambling arrangement regarding risk and loss. If you suffer a loss, you collect; if you don’t, the company which has been collecting your premiums over the years doesn’t have to pay you, so they win.
There are multiple types of policies out on the market today. Some are more important than others, especially at certain times in one’s life. Here is a run-down on policies that you may need.
- Car insurance: This is a policy which will protect your vehicle and all that comes in contact with it. Bodily injury, theft and collision are all examples of coverage possibilities. This is an important one to have; in fact it is required by law in most states. If a bank holds the note on an automobile, they will require full coverage in order to protect their investment.
- Home coverage: Mortgage banks will require this protection and will likely take it out of the monthly mortgage payment in order to ensure that the house is protected in case of fire or other disasters. This one is a must, as well. Homeowners will need to have a monetary amount corresponding to their property’s value. The policy will then guarantee to rebuild the place if it burns to the ground.
- Health protection: As we all know, health protection can mean the difference between life and death. The U.S. is currently working to have a national policy in force so that every citizen is able to go to the doctor when they need to and not be walloped by gigantic bills. A large number of bankruptcies have occurred because astronomical medical bills put families into the poor house.
- Life insurance: There are two options with this type of coverage. One is whole life which will be paid for and kept for a person’s entire lifespan. Another is term which is cheaper and only covers a period of time, such as 10 years, 20 years, etc. This is usually purchased with family and young children in mind, in order to offer peace of mind to the parent who is supporting the household financially.
There are also other options that may be needed by certain individuals depending on their circumstances. Some of these include business protection, rental insurance and nursing home coverage.
Insurance is the ultimate risk management instrument. Risk is a part of our lives because of uncertainty and the lack of control that we have over events. Not all dangers or uncertainties are insurable and not all insurable ones are worth covering. Those that are insurable must meet specific criteria. The idea behind this is to discourage illegal activity, antiselection and speculation.
Risk can also be classified as speculative versus pure and fundamental versus particular. A speculative one is the definition of a gamble. It may result in a loss, a gain or neither. Pure ones differ in that they result in a loss if they occur, but no loss if they do not. Insurance therefore covers pure risks, since there is no element of gain with it. This is enshrined in the principle of indemnity. In non-indemnifying insurance contracts (life insurance for e.g.), financial underwriting helps enforce the indemnifying role of insurance.
A fundamental risk is one that would affect society as a whole or a massive group of people. A particular risk is limited to individuals or a restricted group of people. Insurers generally cover particular risks. They guard against fundamental angers or uncertainties through the principle of proximate cause. Covering fundamental runcertainties would raise premiums too significantly for insurance to be affordable.
To ensure that premiums are affordable and that insurance is for noble reasons, risks covered must be classified as insurable. The criteria that must be satisfied for a pure risk to be considered insurable include:
1) The existence of insurable interest
2 The loss arising from the risk must be reasonably unexpected and accidental (not caused by the insured or policy owner.
3) The loss must be measurable, limited to pure financial value and not based on sentimental value.
4) Losses must not be catastrophic.
5) There must be a pool of similar risks. Without this, premiums would be too high.
6) The insurance affected must be in accordance with public policy.
Once these elements are satisfied, a pure risk can be considered an insurable risk. This principle is not only for insurers to follow, but for the insured as well. Good risk management strategy does not suggest that you insure all insurable risks. This would be unnecessary. Only a risk that would cause a severe loss that would take you months or years to recover should be considered insurable. For e.g. saving individual coverage for dental appointments may be unnecessary unless the expenses are critical and ongoing. Understanding risk would give you a better idea of the role of insurance in your financial plan.