Types of Insurance Benefits And Their Uses
Insurance is perhaps described in area where two parties are engaged in kind of business transaction where one person purchases policies to help cover possible cases of loss and make duly payments on monthly or yearly basis, the outcome will define the preparedness of that particular person towards any kind of risk and the measures, he or she has taken to combat them.
In general terms, insurance can be defined as a type of risk management strategy where possible risk of loss is transferred to another entity. The person to whom insurance is purchased from is referred as the insurer while the insured is the person that has just purchased this risk management strategy. The insured purchases what we call premiums depending on the type of risk management strategy purchased and in this case, the risk management strategy is the insurance.
Types of UK Insurance
- Home Insurance
- Car Insurance
- Travel Insurance
- Life Insurance/Income Protection
- Private Medical/Dental Insurance
- Pet Insurance
Parties in an insurance contract
There are two parties involved in an insurance contract, and these are the insurer and the insured. The insurer can be the company that sells insurances in forms of premiums to an esteemed purchaser who in this case is the insured. The amount the insurer would be receiving from the insured will encompass various possibilities such as type of insurance purchased, the time involved as well as the entity. For instance, life insurance and car insurance is two different insurance policies that cover different entities, carrying different time as well as the amount to be charged in either.
Types of insurance policies
There are many types of insurance policies and most of them are introduced over time depending on the possible risk that needs to be averted.
The most common type of insurance is the auto insurance, which covers possible losses against financial constrains that may be subject to the policyholder’s vehicle involving in any kind of incident like a traffic accident and the coverage ranges from covering property in terms of theft, as well as possible damage. There is also liability that tends to cover incidents where the vehicle may injure someone or property of another as well as encompassing costs that range from treatment, funeral and wages as well as rehabilitation. While in some countries like the UK the driver or vehicle owner is required to buy most of those covers, in other countries, the driver may have to choose randomly.
Another type of insurance is gap insurance, which tends to cover insurance loans that haven’t been addressed by the normal insurance cover in auto insurance. Note that gap insurance can be accessed from the finance company.
Home insurance covers possible destruction of the policyholder’s home. Depending on the geographical setting of the home, the risk may include some of the risks and exclude others; however, common possible risks covered include floods and earthquakes in most parts of the world. Seldom home maintenance doesn’t fall under home insurance policy.
Health insurance is another common type of insurance that is very important to the policyholder. This is because they cover possible risks of paying a high bill in the hospital. This insurance policy is also important during emergencies.
Other insurances include accident, disability, casualty, crime and political risk as well as life insurance for monetary benefits.