What are the main types of insurance?
There are many different types of insurance, but the main types of personal insurance are:
- Life insurance: Pays out an amount in the event of your death or on a specified date.
- Disability insurance: Pays out a single or monthly amount if you become disabled and can no longer work.
- Car insurance: Protects you against financial losses you might suffer as a result of owning a car.
- Home and content insurance: Protects you against financial losses you might suffer as a result of owning a house.
- Medical insurance: Protects you against the cost of various medical treatments you or your family might need.
Why do I need insurance?
Insurance helps you to focus on the things that really matter. Rather than worrying about where the money will come from to look after your family if you die, where you will find the cash to repair your car after a crash or how you will rebuild your home if it burns down. By covering these losses, it also allows communities to grow, especially if many people are all affected at the same time, with things like floods, cyclones, or widespread fires.
How does insurance work?
When you buy an insurance policy, you are making regular monthly payments called premiums to your insurer. If you suffer a loss that is covered by your policy, your insurer will return you to the position you were in before the loss happened. The monthly premiums that you pay are pooled together with the money received from other policyholders. It is from this pool that any claims you make are paid out.