Understanding insurance in a simple way

Understanding insurance in a simple way

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Understanding insurance in a simple way

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Have you ever suffered a loss? If so, you will know how important it is to have the important assets insured: your home, your car, your business. And what about the necessary protection that comes with health and life insurance? 

Insurance is essential in everyone’s lives, as it prevents risk coverage. If a problem occurs, such as a fire, a car accident, a theft in the premises of your store – you’ll rest assured knowing you are protected if you have insurance. However, there are people who do not care about having insurance, or maybe they do not know about different types of insurance. In this post, we share some essential ideas about insurance. 

It is common to find situations that – in a random way – negatively harm people or companies, either economically and/or for health and personal integrity issues. Of course, those physical or material damages, in addition, have an associated negative economic impact. This is why it is a crucial priority to purchase insurance to cover these types of setbacks and eventualities. 

What is insurance? 

Insurance covers the risks when transferring them to an insurer. The insurer is then in charge of guaranteeing reimbursement for all or part of the damage that comes from certain situations or accidents. The insured must pay a monthly or annual amount for a benefit or future compensation in the event of an adverse situation, which in certain cases can be extreme. 

How many types of insurance currently exist? 

We classify different types of insurance as personal insurance, stop-loss insurance, damage or property insurance and insurance for the provision of services. Although there is also another way to differentiate them into two groups according to what they cover: insurance for damages to people or against property damage. 

On the one hand, personal insurance covers the person before any unforeseen event or event that directly affects him or her, such as falling ill, suffering a health alteration or dying. Among the most important insurances within this group are life insurance. Life insurance compensates the heir of the insured in the event of death. Medical insurance covers the insured in case of unexpected illness, and accident insurance covers the integrity of the insured in case of an accident. 

In the case of insurance against material damage, this type of plan covers the loss of assets that a person loses due to a loss or a catastrophe. In this group we can highlight car insurance, against theft, home insurance, fire insurance or liability insurance. 

What is an insurance policy? 

A policy is the most important document in the insurance contract, because it contains all which is agreed upon between the insured person/company and the insurance provider. In the policy, you will find all the rights and obligations to be fulfilled between the parties. We recommend reading your policy carefully before signing it and contracting any type of insurance. 

Since there exists a wide range of risks when it comes to insurance, it is imperative to determine exactly which risks each policy covers, and which risks it doesn’t. There must be zero doubts when it comes to this. In this day and age, not having insurance could cost you big time, but so can not understanding your policy.

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