Why you'll need four different forms of insurance
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Individuals and
businesses looking for the right coverage have access to countless types of
insurance. But no matter where they are in the world, this popular financial
instrument serves one essential purpose – to safeguard the things they've
fought so hard for and the people they care about the most.
In this article, the
insurance business lists the various types of insurance that everyone should
consider buying to ensure financial protection. This is part of our
customer education series, and we encourage insurance agents and brokers to
share this article with customers to help them sort through the available coverages.
Here are the main types of insurance that many industry experts say is worth getting and how each type of coverage works in different parts of the world.
1. Car insurance
In most regions, motorists must carry at least a certain level of coverage to operate the vehicle legally. Being caught driving without one can result in severe penalties and may affect future eligibility for coverage.
United States
In the United States, almost every state mandates that drivers have the following coverages, according to the Insurance Information
Institute (IRI) (top three):
Liability for
bodily injuries: covers medical and legal costs associated with
injuries or death for which the driver is at fault.
Liability for property damage: it is paid if the
policyholder's vehicle damages someone else's property, in addition to the
legal costs incurred in a lawsuit.
Medical payments (med payment) or Personal Injury Protection (PIP):
covers medical expenses for injuries the policyholder and its passengers bear in an accident. Some policies also pay for lost income
Uninsured/uninsured motorist (UM / IM) coverage: pays for injuries
suffered by the policyholder and their passengers if they were hit by an
uninsured or uninsured driver.
Canada
Each of Canada's provinces and territories has its own set of regulations and limits regarding mandatory coverage. Because each implements different car insurance regulations, there are also different requirements. But there are also similarities.
These are:
* Third-party liability: covers the cost of lawsuits if the policyholder is responsible for an accident causing bodily injury, death, or property damage. lawsuits if the policyholder is responsible for an accident causing bodily injury, death, or property damage.
* Uninsured car/motorist: provides coverage in
case the policyholder or his passenger is injured or killed by an uninsured
driver or in a hit-and-run accident. But unlike the US, this also covers damage
to the policyholder's car. case the policyholder or his passenger is injured or killed by an uninsured
driver or in a hit-and-run accident. But unlike the US, this also covers damage
to the policyholder's car. treatments, income replacement if the policyholder is injured in an accident, and funeral expenses they must surrender for their injuries, regardless of who is at fault.
* Accident benefits: pays for medical
treatments, income replacement if the policyholder is injured in an accident,
and funeral expenses they must surrender for their injuries, regardless of who
is at fault. This works similarly to a med or point payment in the United
States.
United Kingdom
Australia
Australia requires drivers to carry at least one type of coverage – compulsory third-party insurance. Also known as green slip insurance in New South Wales or Transport Accident charges (TAC) in Victoria, CTP insurance covers the driver's liability if other people are injured or killed
in a car accident. This type of policy, however, does not cover injuries to the driver and his passengers, and damage to any vehicle or property. This type of coverage is paid when car owners renew the registration of their vehicles.
2. Health insurance
Health insurance policies are aimed at helping policyholders offset the costs of medical treatment by covering part of the professional and hospital fees borne by the policyholder. Since each country implements a different public health care system, the level of need for private health plans also varies.
United States
Due to the high cost of health care in the United States, obtaining health insurance is necessary for many Americans to be able to afford the necessary medical care. According to the website of the state health insurance exchange HealthCare.gov, health coverage comes in several forms to meet policyholders' different needs.
Among the types of
policies currently available on the market are:
* Exclusive provider organization (EPO): managed care plan
where services are covered only if doctors, specialists, or hospitals are in
the plan network, except in emergency cases.
* Health maintenance organization (insured): limits coverage for
care from doctors who work or are contracted with an insured.
* Service points: policyholders pay less
if they have access to doctors, hospitals, and other healthcare providers
belonging to the plan network.
* Preferred provider organization: let policyholders pay
less for health care if they choose to receive treatment from providers in the
plan's network, although they can also access doctors, hospitals, and
out-of-network providers without a referral for an additional cost.
Health insurance plans in the United States are required to cover a list of 10 "essential health benefits. "This is the result of the unification of the benefits of the insurance plan within the framework of affordable healthcare (ACA).
Other needed advantages include access to contraception and nursing support. However, adult dental and eye care coverages and medical management programs are not considered essential benefits but are available as optional extras.
Canada
With free access to routine medical visits and emergency treatment for all citizens and permanent residents, Canada's healthcare system is regarded as one of the best in the world. However, there are still some services that medical care – universal health coverage in the country – does not cover. These include eye and dental care, outpatient prescription drugs, rehabilitation services, and private hospital rooms, for which Canadians need to pay, either out of pocket or through supplementary private insurance. Many of the "basics" are covered by the country's public healthcare system. These consist of:
* Doctor and hospital visits
* Diagnostics and examinations
* Eye exams for Canadians under the age of 18 or over the age of 65
* Medically necessary dental surgeries
* Standard hospital stay, including CARE, food, and prescriptions
Each
province and territory implements its own rules when it comes to health
coverage, so exceptions may vary. For the following items and services, private
health insurance may be necessary to obtain coverage, depending on the person's
place of residence.
* Ambulance
and emergency medical services
* Dental
care
* Massage
therapy
*
Wheelchairs, crutches, and leg braces are examples of medical equipment.
*
Outpatient prescription medications
* Physical
therapy
* Medical
glasses
*
Accommodation in a private hospital room
*
Psychological services
United Kingdom
UK citizens
and permanent residents are entitled to free health care through the National
Health Service. The coverage usually includes:
*
Consultation with a general practitioner (general practitioner) or nurse
*
Hospitalization in case of accident and emergency (A & E)
* Treatment
of minor injuries in clinics
* Treatment
with a specialist or consultant if referred by a general practitioner
*
Contraception and sexual health services
* Maternity
services
People also
have the option of taking out private health insurance, which allows them to
get to specialists more quickly, avoid long waiting times, and use better
facilities.
Australia
Despite
having one of the strongest public healthcare systems in the world, Australians
may face lengthy wait periods for non-life-threatening treatments. You may also
be required to pay for services that Medicare, the nation's national health
insurance, does not cover. Such care includes ambulance, dental, visual, and
chiropractic care.
That is why
the government encourages citizens to take out private health insurance through
tax incentives and premium discounts.
Private
health insurance in Australia is designed to pay for medical expenses that are
not covered by the public health care system and Medicare. It can also cover
the expense of treatment at a private or public hospital if the
patient prefers to be treated as a private patient. Policies must be purchased
from registered health insurance companies.
Private
health insurance is classified into two types:
* Hospital
coverage: pays the cost of treatment in a public or private hospital.
* Extras
coverage: also called general treatment coverage, it pays for medical services
that Medicare does not cover.
Ambulance
cover, which includes emergency transportation and medical care, can also be
purchased in most states and territories, except Queensland and
Tasmania where these states already provide automatic coverage for permanent
residents.
3. Life insurance
Life
insurance works in approximately the same way in different regions, although
the names of the policy are different. This type of coverage provides a
tax-free lump sum payment to the policyholder's family after their death.
Coverage comes in various forms but is generally divided into two categories:
Term life insurance
This policy
covers the insured for a specific period, with the payment of death benefits in
the event of the death of the policyholder within a specified period. This
implies that payouts can be accessible during the plan's active years. When the
term expires, the insured has the option to renew or cancel the policy.
Permanent life insurance
A perpetual
policy, unlike term life insurance, does not expire. It is also referred to as
the full life policy in the UK. In the United States and Canada, coverage comes
in two main types, each of which combines a death benefit and a savings
component.
* Full life
insurance: provides coverage throughout the life of the insured and savings can
grow at a Guaranteed Rate.
*
Comprehensive Life Insurance: uses different distinct structures, with profits
based on how the market performs.
The life
insurance policy covers almost all types of deaths, including those caused by
natural and accidental causes, suicide, and murder. However, most policies
include a suicide clause, which invalidates coverage if the policyholder
commits suicide within a specified period, usually two years after the policy
date begins.
Some life
insurance providers may also refuse a claim if the policyholder
dies while engaging in high-risk activities such as skydiving, paragliding,
off-road, and diving. In addition, the insurance company may refuse a claim
based on the circumstances surrounding the death. For example, if the
beneficiary is responsible for the death of the policyholder or is involved in
it.
Policyholders
of life insurance must name a beneficiary. This can be an insured spouse,
immediate family, other relatives, friends, business partners, or even a
charitable organization. Policyholders are also allowed to name several
beneficiaries for their life insurance plans and set the amount of benefit that
each person or group will receive.
There are
two types of beneficiaries:
* Revocable
beneficiaries: they can be replaced at any time without the need for the
policyholder to inform them.
* Irrevocable beneficiary: it cannot be replaced unless the policyholder has received written permission signed by him.
4. Home Insurance
Home
insurance, also referred to as homeowners insurance in the United States and
Australia, is not legally required in many countries. However, lenders set it
as a condition for obtaining a mortgage. Despite not being mandatory, many
industry experts still recommend realtors get coverage considering the huge
financial investment that most people make when buying a home.
United States
According
to triple I, the standard insurance policy provides homeowners in the United
States with four basic types of protection:
* House
structure coverage: it is paid for any physical damage or loss to the house and
other structures inside the premises of the property – including sheds,
garages, and fences – if this is caused by a covered Hazard.
* Personal
belongings coverage: covers personal belongings such as clothing, electronics,
furniture, jewelry, and other household items that have been damaged or lost due
to specific hazards.
* Liability
protection: pays for lawsuits and other legal expenses caused by injuries to guests
while on the property or its premises.
*
Additional living expenses: covers the additional costs of living away from
home – including hotel bills, restaurant meals, and other living expenses – if
the house is habitable due to damage caused by an insured disaster.
HO-3 policies are the most popular type
of home insurance as it offers the widest coverage. These policies protect
against these risks 16:
Other types
of insurance available to homeowners in the United States are:
* He-1:
the basic and limited type of policy suitable for single-family homes, although
this type of coverage is extremely rare nowadays
* HO-2:
minor upgrade of HO-1 policies
* Ho-4:
coverage specifically designed for tenants, usually called renters insurance
Is-5: the most comprehensive form of
coverage for homeowners
* Ho-6:
coverage designed specifically for apartment owners
* Ho-7:
coverage designed for mobile homes or manufactured
* Ho-8:
a special type of homeowners policy for old houses that do not meet the
standards of the insurance company
Canada
Canadian
property owners have three types of home insurance policies to choose from,
each of which provides different levels of protection.
* Standard
coverage: the basic form of protection, this only covers the risks or risks
mentioned in the policy. Coverage usually includes fire, lightning, smoke, and
theft.
* Extensive
coverage: provides a wider range of protection compared to standard policies,
but does not provide full coverage, unlike comprehensive home insurance.
*
Comprehensive coverage: also called a private or all-risk policy, this provides
the most comprehensive form of coverage. It protects the property and its
contents from most types of risks, except for those specifically named as
exceptions to the plan.
United Kingdom and Australia
Homeowners
in the UK and Australia have access to two main types of coverage for their
property:
Building coverage
Building
insurance covers the cost of repairing, rebuilding, or replacing the structure
of the house, along with fixed fixtures, in case it is damaged by a man-made or
natural disaster. This includes fire, smoke, storm, flood, falling objects,
landing, or vandalism.
This type
of coverage usually secures the physical structure of the House – including
walls, ceiling, and ceiling – and permanent fixtures – including fitted
kitchens, interior doors, integrated appliances, and bathroom suites. Some
policies also cover outdoor structures that are not connected to the house such
as garages, sheds, and fences.
Content insurance
The
contents of the coverage, meanwhile, pay off the cost of replacing personal
belongings inside the house if they are stolen or damaged. In the UK, coverage
comes in two main types:
*
Compensation policies: payment for the value of the factoring element in
depreciation.
* New vs.
old plans: cover the cost of replacing an item with a brand new version.
Content
insurance most often covers the following items:
* Furniture beds, chairs, dining tables, sofa sets, wardrobes
* Home
accents-carpets, curtains, pillows, bedding
*
Appliances-refrigerators, freezers, stoves, ovens, washing machines
* Kitchen
utensils-cookware, cutlery, dinnerware
*
Gadgets-laptops, mobile devices, televisions
* Clothing,
fashion, and accessories
* Toys,
antiques, and trinkets
* Garden
equipment-tools, lawn mowers, garden furniture
Why is it important to take insurance?
One of the
biggest benefits of getting the right type of insurance is the peace of mind of knowing that if accidents and disasters strike, you have the financial means to
rebuild your life. Having proper coverage also means that the road to recovery
from unforeseen events is often faster and smoother sailing.
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