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Insurance is Good Policy
By Myles Johnstone

Insurance is a gamble, it is a gamble taken by the insurance company that your payments will amount to more than your claims thus giving them a profit.

Insurance is also a gamble for many people because of the simple fact that they are not insured and they are therefore taking the gamble that disaster will not strike them.

The more technical explanation of insurance is that it is a form of risk management, the "equitable transfer of a potential loss, from on entity to another in return for payment"

Types of Insurance

The most common and well known forms of insurance are life insurance, health insurance, auto insurance, household insurance/homeowners insurance and various forms of business insurance. All of us, at one time or another, have had some dealings with these types of insurance. We would be foolish not to consider them all as important expenses that we must incur to ensure safety and security.

Health Insurance

In the USA we need to ensure adequate health coverage, as without it it, we may find that obtaining treatment for illness is virtually impossible or beyond our means. In the UK they have a National Health Service where deductions are made from wages in the form a National Insurance to cover for health costs. Though health care is free is the UK many now opt for health insurance to obtain better service.

Health insurance is available in three forms (or a mix of the 3) these are: fee for service, preferred provider options (PPO's) & health maintenance organizations (HMO's).

Life Insurance

It is surprising how many people still do not possess a life insurance policy. Life insurance can be pure insurance (also known as whole life), which pays out a predetermined cash benefit upon death, or it can be cash value insurance, which has elements similar to a cash savings policy.

Life insurance policies are often an additional requirement for loans. These types of insurance cover for the repayment of loans or mortgages upon death. Life insurance is such an important subject that we have created a separate life insurance section.

Auto Insurance

Known as motor insurance in the UK, auto insurance is a legal requirement and is designed to insure against liability to others and damage to yourself or vehicle. There are various forms of auto insurance available and in some places these are referred to as "fully comprehensive" which covers for all aspects of liability or "3rd party"/"3rd party, fire and theft" which only covers the insurer for claims from third parties and/or fire damage and theft.

Household/Homeowner's Insurance

Household or home owner's insurance cover the insurer for damage to the home and property and to any liability to third parties. There are a great deal of choices to be had in homeowner insurance policies as cover varies from policy to policy. It is common for "bricks & mortar" insurance to be included within mortgage repayments to cover the home. This type of basic insurance does not cover the contents inside the building as there are separate policies available for this.

Contents insurance is the type of insurance that insures the individuals property that is kept inside the home. Some policies cover for contents which are sometimes taken outside the home such as cameras etc. Polices can be basic policies which cover the property for a fixed amount or a "good as new" or "new for old" type insurance which pays out the replacement value of the property which is lost or damaged.

Business Insurance

The is a multitude of business insurance solutions available from those useful to the small to medium enterprise right up to insurance for shipping or large corporations. We will therefore consider business insurance in a later article.

The articles below are to help you understand insurance and related subject, that little bit better. We hope that you find them useful.

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