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Understanding Insurance Before You Buy

You can’t control every aspect of your life, which is one of the main reasons insurance companies exist. To give you a basic definition, insurance is a way of avoiding the risk of potential loss. Companies that sell insurance sell many types although rates and coverage can vary depending on the company. When you choose insurance, you pay a monthly amount called a premium. Also, you have the choice of a deductible. For example, if your deductible is $100 and you have medical costs of $500, the insurance covers $400. To better understand insurance, it may be beneficial to consider each type available.

Health Insurance covers medical expenses that may be caused by an accident or illness. Most people have some sort of health insurance plan in place. Depending on the coverage you get though, your health insurance may not cover every illness or injury that you have. And, for most companies, you are only covered after your medical expenses are higher than the deductible. A type of medical insurance is dental insurance which is typically considered optional. Dental insurance helps people who may experience sudden dental hardships and be unable to pay.

Auto insurance is any type of insurance that’s purchased for cars, trucks, and other automobiles. The main benefit of auto insurance is coverage against any losses due to traffic accidents. If your ensured vehicle is damaged due to the accident, the insurance company pays for the repair costs. The company will also provide a replacement if the vehicle is totaled in the accident. In many countries, purchasing a policy through an auto insurance agency is required by law, although you have a choice with companies. You can compare rates and amount of coverage to find the best option for you.

Life insurance is frequently purchased by the “breadwinner” in the family. According to the insurance contract, if the insured person dies, the company pays a certain amount of money to the family. There are two main types of life insurance: protection policies and investment policies. Depending on the type of payment desired or the age of the person being insured, you may decide which option works best for you.

Pet insurance is less common, but can be purchased. If your pet is injured or has an illness, the insurance covers the veterinary expenses. Some policies are also designed to pay if the pet dies, becomes lost, or is stolen. Most areas have some sort of pet insurance, but it’s one of the lesser purchased types today.

Travel insurance is a type of insurance that’s designed to cover financial or any other losses while traveling either abroad or even within your own country. This type of insurance is most commonly used to cover theft, loss, delayed luggage, emergency costs, legal assistance, accidental death, and even overseas funeral expenses.

These are the major types of insurance available today. While some are required by law, others like pet or travel insurance are optional and not purchased by the majority of people. Discuss coverage options with an insurance agent to learn more and find the best option for yourself.

 

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