Insurance Industry Overview
To provide an insurance industry overview, it is best to first define insurance. It is a contract set in place by an insurance company to offer financial or loss protection to an individual or entity. There are many options available, and it is best to make a comparison to find the package most suitable to your budget and purposes. Each package will have different options, so weigh the cost carefully when considering your individual requirements.
Be aware that whilst a low monthly premium may be desirable, it could indicate that the individual is underinsured. If the loss exceeds the insured amount, the individual will be responsible for recouping those losses on his or her own dime. Bear in mind that a deductible amount is required by all insurance companies, so that amount should be factored into the total cost. That said, there are quite a few package types available from which to choose.
Personal property insurance provides cover for homeowners by providing protection for common household items, thus the contents are not specified (individually insured), but are listed, accumulating a specific cover value. These items will fall into the categories of household furnishings, kitchen and household appliances, clothing and electronic equipment.
Life insurance is taken out by an individual to ensure that the beneficiary will receive a lump sum upon his or her death. This guards against the difficulties experienced by the impact of the individual’s death, which may result in loss of income, along with funeral costs and other unforeseen expenses like medical bills and mortgage payments.
Stop loss insurance, or reinsurance, is a popular option and is often referred to as insurance for insurers. The risk portfolio in question is transferred to another party in a ploy to reduce the size of the payment when the insurer must finally honour the insurance contract.
By opting for a whole life insurance policy, the beneficiary will not only receive a payment upon the death of the insured, but a cash amount, which the beneficiary may withdraw or borrow against, is accumulated. This differs to term life insurance, which pays out a specific sum upon the policy’s maturity date. Permanent life insurance does not expire and acts as a savings plan for the insured, and is often utilised to meet the insured individual’s future goals for, say, education.
This differs slightly from universal life insurance, which offers low cost protection, much like term life insurance, but with an added savings feature, and the premiums are alterable should the insured individual’s circumstances require it.