Types of Insurance You Might Need...

I promise you that this will not be the most interesting post, but it will be informative. We all know we will have different types of insurance in our lifetime, but it can be so confusing. I will provide a brief overview of the different types of insurance, including:

• Auto Insurance
  
• Homeowner's Insurance
  
• Renter's Insurance
  
• Life Insurance
  
• Disability Insurance
  
• Health Insurance
  
• Long Term Care Insurance
  

Auto insurance is the most common type of insurance and pays for damages to persons and property when automobiles are involved in accidents, fires, thefts etc. Homeowner's and renter's insurance covers dwelling and/or personal property from fires, floods, thefts and even volcanoes if you live in Hawaii. Life insurance provides financial protection from a person's death so that dependents do not suffer hardship as a direct result from the loss of life. Businesses also use life insurance to protect against the death of a key person in the firm. Disability insurance pays a percentage of a person's wage when they are unable to work…think AFLAC. Health insurance covers the medical bills for the treatment of illnesses. Long term care insurance is used to pay for individualized care beyond medical and nursing care for people with disabilities.

When you own insurance, you have a contract with the insurance company that you will be compensated for "covered losses." For instance, I am covered for $100,000 in the case of my death(loss). The typical losses include death, destruction or theft of property, disability, illness and so on. Even if you have made only one premium payment, their contract will specify that the insurance company pay the policy amount. The goal of insurance is to reduce your risk and provide a smaller loss (premium payments) in exchange for a larger loss (death, property damage, medical bills).

I don't like paying for insurance, but it sure is nice having the "peace of mind" of being covered. These are the basic types of insurance you will probably see in your lifetime. I will spend more time on each different type of insurance in future posts.

Wishing You Wealth in all its Greatest Forms

Alex