Types of Insurance

There are many types of insurance, almost more than you can list. Whether it is health, disability, life, homeowners, renters, or auto insurance, understanding how insurance companies calculate risk and the standard features of insurance policies will help you make the best choices for your personal needs.

Health Insurance

What happens when you go to the doctor? Perhaps one of your family members has medical insurance that covers your medical expenses. While you may be covered by someone else’s insurance now, you will soon be in a position to make your own choices about health insurance.

Health insurance, also called medical insurance, helps protect you and your family from expensive or unexpected health care-related expenses. It is designed to estimate your overall risk of health-related expenses and supplement your cost for care, including doctor’s appointments, hospitalization, prescriptions, and other similar costs. Originally, health insurance was designed to cover “catastrophic” health-related expenses, but has been gradually expanded to include more preventative care.

Disability Insurance

Disability insurance, also known as disability income insurance, is another type of medical coverage. It pays part of your income if you become ill or injured and need an extended period of time to recover or if you can no longer work.

Medicare

Medicare is a health insurance program provided by the federal government to people over the age of 65 or with certain health conditions.

Medicaid

Medicaid is another type of federal health insurance, and it pays health care costs for low-income citizens of all ages. It is administered by state and local governments, which also provide matching funds to offset the costs.

Long-Term Care Insurance

Long-term care insurance helps cover costs associatedwith care in a nursing home or other similar facilities if  you become unable to take care of yourself. Generally, people who need long-term care require assistance with daily activities such as dressing, bathing, walking, etc.

Life Insurance

The main purpose of life insurance is to insure against loss of income due to death and can also be used for retirement planning and investing. It is the one kind of insurance you pay for, but only others benefit from it. Except in rare cases, the purpose of life insurance is to provide for others at the time of your death.
Life insurance companies offer a wide array of policies to meet your needs as your personal circumstances change and evolve. Following is a brief description of the three basic kinds of life insurance.

• Term life or “temporary” insurance: Provides coverage for a defined time period, generally five,
• 10, or 20 years; pays cash benefits to a named beneficiary if the insured dies during the term of the policy.
• Whole life insurance: Covers the insured for their whole life; benefits are paid to the beneficiaries when the policyholder dies.
• Universal life insurance: Whole life insurance with more flexibility; allows the policyholder to maintain their policy and still make changes, such as decreasing the death benefit or changing the premiums.

Liability Insurance

Liability insurance protects you when others claim to be hurt or injured as a result of something you did or did not do. Generally, it pays medical bills or provides compensation to anyone who can prove you were negligent or acted improperly. Most states, including Oklahoma, require you to have liability insurance on your automobile in case you are involved in an accident. Damage or injuries caused intentionally are not covered by liability insurance policies.

Homeowner’s Insurance

For most people, their home is their largest single investment. Having homeowner’s insurance protects your investment against disasters such as fire, tornadoes, busted pipes, robbery, and other similar problems. Most standard homeowner insurance policies cover your house (the structure itself) and the contents (any personal property you have in the house). In addition, the majority of homeowner insurance policies provide liability coverage in case someone visiting your home is injured.

Renter’s Insurance

As a young person starting out, you are probably more likely to be a renter than a homeowner. To protect your personal property, you should consider renter’s insurance which provides some of the same coverage as a homeowner’s policy.
Renter’s insurance protects renters from theft or damage of personal items—furniture, TV, computer, clothing, etc.—in their apartments or their cars.
The landlord should carry insurance to cover the building itself; all you need to insure is your personal property.
Except for a very few circumstances, your items will not be covered by your parent’s policy or by the landlord’s policy.

Automobile Insurance

Buying a car is an important goal for most young people. With the payments, gasoline, and
insurance, it can be an expensive purchase.
However, failing to purchase automobile insurance can be an even more expensive decision. Everything is fine, until something happens. Before stopping to ask why insurance is necessary, remember this: It is the law!