Beginner's Guide to Understanding Different Types of Insurance
Every day of our lives, we face risks, some of which can be serious and damaging. People who want to minimize the costs that come with those risks can buy a product that allows them to get money when bad things that happen to them or their property. That product is called insurance.
What does insurance do for me?
Simply put, compare insurance to a kind of financial backer. Insurance allows you to take back what you lost, or at least some amount of it. It lets you manage risk by paying fees (known as the premium) to an insurance company that will give you money when you lose something you insured.
The insurance company collects all these premiums and invests them so that it has money to pay whenever a client claims a loss. The company also sets the terms of the contracts, called insurance policies, under which clients will be paid back under specific conditions.
What are the different types of insurance?
Insurance in the Philippines usually comes in these forms:
• Health Insurance
Health insurance covers the cost of medical treatments. Medical costs constantly rise, so a serious injury, a hospital stay or even a check-up can put a hole in your wallet and bank account unless you have insurance.
• Life Insurance
We compare insurance to a Band-Aid for the wallet earlier; this time insurance acts as a replacement breadwinner. When you die, the people you financially support can receive money either in one lump sum or yearly payments, thanks to life insurance. Also, consider your burial and funeral expenses shouldered.
• Auto Insurance
“That’s a nice car you have, it would be a shame if something happened to it,” said your creepy neighbor. Auto insurance may not get rid of that creep for you, but if something does happen to your car, the insurance will pay for it. Even if you injure someone or damage property accidentally because of the car. (Note that I said accidentally. Don’t get any bad ideas.)
• Travel Insurance
Here’s one kind of insurance in the Philippines that you can carry abroad. This insurance shoulders costs related to travel-related mishaps, from annoying ones such as flight delays/cancellations to serious stuff like lost luggage, hospitalization abroad and even death while in travel.
• Property Insurance
You can protect your house, your things or other stuff you own using property insurance. Depending on the contract, you get compensated when your insured property gets damaged or lost via acts of God (natural calamities) or acts of man (theft, natural calamities and more).
• Disability Insurance
This insurance provides income to a person who gets a disability that prevents him from working. A short-term version can pay for medical bills and other needs, while a long-term one for that person’s expenses moving forward. It sort of helps in making disabilities suck a bit less.
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