The basics of what you need to know about insurance
When we hear the word "insurance", it somehow gives us a sense of dread, so let's change that and find out what it means to have insurance in your life.
When it comes to "insurance", many are stumped, as it's a concept that they haven't elected to get familiar with due to the lack of funds or even the lack of understanding.
The thing is, we have been described as a culture of people that do what they see others doing, so for instance, parental experts say, children do what they see their parents do.
We take this to mean that if children see their parents being savvy with money, saving or some sort of contingency plan for your family, such as taking out insurance, we think that they will mirror this type of behaviour. But this may not always be the case.
When it comes to being prepared for that rainy day, many leave things to chance. We think that in order to handle anything in life, you have to prepare for the unexpected. That doesn't mean living with fear, it's just a reality of life.
And when it comes to the concept of progression, we want to leave our children with more than what we had. So let's take a look at some basics to insurance.
What is Insurance?
Definition: an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.
When people buy insurance, they put their money into a pool with many others. Some of that pool of money helps the policyholders who suffer a hardship in that period. The hardship can be home, auto or business losses. You are covered only for losses written in your contract, not for predictable events.
The main types of insurance include; Life Insurance, Health Insurance, Property and Casualty Insurance, Retirement or Pension Insurance. There could be more but we are focusing on these main forms of insurance and will give you a short breakdown of each.
Life Insurance
"There are two major types of life insurance—term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life," Insurance Information Institute explains.
"Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions."
Health Insurance
This includes medical cover. This form of insurance can assist you for services that the provincial health care system does not cover. There is also some sense of ease to medical care with this type of insurance, so you have a selected list of doctors, specialists, and care givers that you are privy to.
Health insurance can also assist you with emergency procedures, dentistry, and any procedure that is planned but elected.
Property and Casualty Insurance
This type of insurance includes cover for loss or damage of your property or your personal items, like your car or business or businesses.
"While casualty insurance shields the insured from legal liability for losses caused by injury to other people or damage to property of others," Live and Learn Website explains.
Retirement Insurance
This is a category of life insurance plans that are designed to meet your post-retirement needs such as medical and living expenses. To ensure that you can enjoy your retirement with financial independence, these type of policies can assist you with planning for your expense and secure your future, reports ICICI website.
With all types of insurance, there is some type of small print, so we always, always say make sure that you fully understand the terms of your policy and ask as many questions as you want to.
Sometimes we are afraid to seem ignorant, so we shy away from asking those questions that we somehow deem as silly, let us just reiterate, no question can be silly, if it's helping you understand and allowing you to feel more informed.
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