Different types of Insurance Policies
Key difference: Basically, an Insurance Policy is a standard form of contract between the insurer and the insured. In the societies, there are different types of insurance policies and contracts which are designed to meet the specific needs of an individual. Since these policies are of standard forms, they feature different types of insurance policies, some of which are listed below.
What is Insurance Policy?
An insurance policy is a contract in which an individual or entity obtains a financial protection or security against the losses, which may happen at any undesirable instant of time. These are those policies which helps an individual to have an assurance at one side by paying a specific amount of payment in exchange to an entity. Insurance involves pooling funds from many insured entities, known as exposures to pay for the losses that some may incur. Insurance involves ‘claims’ and loss handling methods, which are materialistic utilities paid for the actual product.
Risks and Dangers might happen at any unknowing time in an individual’s life, in order to overcome and help an individual to solve over the problem up to extend. There are different types of insurance policies in the societies, among which the major one’s are discussed and explained below:
Comparison between different types of Insurance Policies:
This insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. These policies pay the proceeds to the beneficiary either in lump or in an annuity form. Generally, a person cannot purchase a policy on another person without their knowledge.
As the name suggests, the property insurance provides protection against the risks to property such as the fire, theft or weather damage. The special types of Property Insurance are flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance. In societies there are many types of property insurance, among which some are:
- Builder's risk Insurance
- Crop Insurance
- Earthquake Insurance
- Flood Insurance
- Home Insurance
These insurance policies cover the cost of medical treatments. Often, these are the most common type of insurance policies among the employees. Also, in most of the developed countries, almost all citizens receive some health coverage from their respective governments; these are paid from the taxations received by the government.
Personal Accident Insurance:
These insurance allows a full compensation to the individual suffering from a danger injuries, accidents or loss of life. The policy also includes the compensation cost of the treatments, along with the use of hospital facilities at the time of treatments.
Accident, Sickness, and Unemployment Insurance:
These insurance if for the disable one’s or for the one’s who have faced accidents with a major body part loss.
The insurance policies related to Accident, Sickness, and Unemployment is:
- Disability Insurance
- Long-term Disability Insurance
- Disability Overhead Insurance
- Total Permanent Disability Insurance
- Workers' Compensation
The policy covers the insured against the various misfortunes which happen during the traveling. The travel insurance covers the insured loss regarding the medical losses, traveling accidents, luggage and baggage losses, etc.
This type of insurance is a broad superset, which covers the legal claims against the insured. Liability policies typically cover only the negligence of the insured, and will not apply to results of willful or intentional acts by the insured. The subtypes of such Liability insurances are:
- Public Liability
- Directors and Officers Liability Insurance (D&O)
- Environmental Liability Insurance
- Errors and Omissions Insurance (E&O)
- Prize Indemnity Insurance
- Professional liability Insurance or Professional Indemnity Insurance (PI)
The motors or vehicles running on roads have to be insured, so that at the time of any accidents or problem these motors can get their penny back from the claimed insurance. Generally, there are two types of motor insurances: the one which covers the act of liability and the other covers all the liabilities and damages covered by vehicles.
This insurance repays some or all of a loan when certain circumstances arise to the borrower such as unemployment, disability, or death. Some types of Credit insurances are:
- Mortgage Insurance
- Trade credit Insurance
Image Courtesy: enhancedinsurance.com, mariasachs.com, punjabkesari.com, bajajcapitalinsurance.blogspot.com, over50lifeinsurance4u.co.uk, businesstoday.intoday.in, life-and-insurance.net, rediff.com, insurancequotes.com