Mandatory Insurance Policies for Everyone

There are so many insurance policies, insurance policies come in different prices, features and benefits.The truth is you can’t possibly choose to purchase every insurance policy, you should streamline your choices to mandatory insurance policies.

It’s quite easy to know which insurance coverage is mandatory; all you have to do is ask yourself this important question… “What is the most important thing to me?” This is an important point to consider, there is no point insuring something that is of no importance to you. The protection of assets that matter to you is expedient in the establishment of a solid financial backup plan. There are many insurance policies that can help you protect your assets and earning ability. However, prior to the purchase of any type of insurance, you must ensure you understand the terms of the coverage that’s expressly written in the policy. You can choose to enlist the services of your lawyer to peruse the content of your insurance before appending your signature to seal the deal. This write-up highlights the mandatory policies everyone should have, they include the following;

1. Car insurance: there are mandatory laws for car insurance in certain parts of the world. A car insurance is one of the mandatory insurance policies everyone must purchase. The importance of purchasing an automobile insurance cannot be over emphasized, regardless of if you drive a jalopy or an automobile that has been purchased over the years. An automobile insurance is a solid backup strategy if you get involved in a car accident that results in the injury and/or damage of another person’s property. Such an unfortunate incident could subsequently subject you to a lawsuit that might cost you all you have worked for. The tragic result of an accident is burdensome, no one wants to be found in such a fix. Without a car insurance, you are at a risk of losing everything you own. As a matter of fact, if you purchase an insurance policy with a coverage that helps you with meagre savings, you are not better off than a person without a car insurance coverage. Ensure you purchase a car insurance that can cover any unlikely or unforeseen automobile accident.

2. Life insurance: a life insurance policy enables you to protect people that depend on you financially. Such people include your children, spouse, relatives or other loved ones. If you feel your loved ones might encounter financial hardship if you lose your life, then this type of insurance should be at the top on your list of mandatory insurance policies. You can choose to purchase a life insurance policy that will serve as a substitute for your annual income over the duration of years in which you plan to stay employed. Your choice of life insurance might also incur burial costs, this will relieve your family of any unexpected financial burden.

3. Long-term disability insurance: the fear of considering the future possibility of a long-term disability is one of the major reasons why people ignore long-term disability insurance policies. Everyone hopes that nothing bad will happen to them, this isn’t a wise decision. Don’t get me wrong, while it is always good to stay positive, it is even better to have a backup plan. It is mandatory to consider purchasing a disability policy that gives you and your family the required coverage to maintain your current standard of living, even after losing your earning power. The disability policy helps you to protect your earning power if you happen to suffer from any form of disability later in the future.

Health insurance: the high cost of getting the required medical care is a major reason why purchasing a health insurance policy is a necessity. Simple consultations result in soaring bills these days, not to talk of hospital bills you have to pay as a result of severe injuries that have left you confined on the hospital bed for days, weeks, or even months. Hospital bills for a surgical procedure might total into 5 to 6 figures, without a health insurance you might end up spending all you have on a severe health condition in weeks. The financial burden of an increased cost of health insurance policies is nothing compared to the cost of medical care without a health insurance.

Home Insurance Policies: Your Options

Your home is definitely one of your most valuable assets or investments, if not the most valuable. In this regard, a lot of home owners actually prefer getting homeowners insurance policies.

Nonetheless, you must also know that getting a home insurance policy can be a little tricky. In fact, with the proliferation of companies offering policies for home insurance, the competition is getting more and more intense. And each company offers different packages and perks as bait to potential customers.

In the same manner, as you scout for a home insurance policy that will suitable for you, you will also find out that there are actually a lot of options as to the different types of policies.

This is essentially why before you sign an agreement with a company for a certain home insurance policy, it is very important that you do your research about home insurance policies and your available options first. Gather enough information as the rudiments of every policy as well the company offering it. Getting quotes from various companies is as equally important as well.

In this regard, here are some information about your options when it comes to the different types of policies that are available for home insurance purposes.

The most basic of all the home owners policies is the HO-1 or Homeowners Basic Policy-1. Essentially, this type of home insurance policy will cover your house as well as the fixtures included in it. So if in case or by any accident, your house is damage by fire, theft or natural weather occurrences, this policy will be able to cover for the expenses.

Aside from the circumstances mentioned above, this type of home insurance policy will cover your house as well as the other valuable items inside it against 10 different types of peril as declared in the agreement. The thing with this type of policy though is that a lot of companies have already discontinued offering it because they found it to be redundant in many states.

The second type of home insurance policy is the HO-2. This is actually a little more comprehensive than the first type of policy since it widened its coverage to as much as 16 different perils or causes of damage to your house as well as the fixtures and valuable items therein.

For instance, this type of policy already covers the damages that are due to plumbing, heating, ice/sleet, power outages and AC. And if you happen to be situated in a freezing area, then this policy can be a good choice for you.

Another option you can try is the third type of homeowner insurance which is the HO-3. This is actually termed as the Special HO Policy. Unlike the other policies, this type specifically focuses on the structure of your house. More so, it is able to cover all the hazards that can cause damage to your house-except those hazards which are particularly cited by the insurance company from which you will buy the policy.

On the other hand, if you want a total package, then you should do for the HO 5. This is actually the most extensive of all the homeowners insurance policies. And that is also why this is also the most expensive of all of them.

This type of home insurance policy will give your home protection against practically every factor that might damage your house. The only exemptions are war, earthquakes as well as floods. The thing with this type of home insurance policy though is that not all insurance policies carry it.

If you have a vintage of old home, then a good option for homeowner insurance policy is the HO-8. Unlike the other types of policy, this does not cover the costs for replacement. Instead, it focuses on the market value of your house.

Finally, if you are yet to buy your own home and you are just renting out an apartment or condominium, then you should ask about the HO-4 and HO-5 policies of homeowners insurance.

Classification Of Insurance Policy

Insurance policy can be categorized into indemnity insurance and non-indemnity insurance.

What is indemnity insurance?

This is a guarantee for providing security or protection against possible hurt, damage, loss or liability. Here, an agreed lump sum (as stated inside the policy) is paid as compensation on the risk insured against any incurred loss or damage.

Indemnity insurance is broadly divided into three forms, as follows:

1. Marine

2. Aviation, and

3. Others (other indemnity insurance)

Marine insurance

This includes all vessels designed for aquatic transportation, both on marine and freshwater territories. This includes the huge commercial insurance on hull s and cargo, sailing dinghies, yachts, motor boats, and small crafts generally.

Marine insurance covers these areas of the ship:

· Hull insurance

· Cargo insurance

· Freight insurance

· Others such as insurance of liability

The marine insurance can be insured in different policy forms such as:

· Voyage policy

· Time policy

· Valued policy

· Un-valued policy

· Floating policy

Aviation insurance

This guarantees hulls of aircraft, third party liability, and legal liability to passengers. Compensations, or rather claims, often reach extremely vast amount, although liability to passengers is limited by international conventions.

All the above marine insurance coverage areas and policy are also applicable to aviation industry, with little or no exception.

Other indemnity insurance

These are listed as follows:

· Fire

· Theft and burglary

· Insurance of liability (including third party)

· Insurance of interest

· Consequential loss of profit

· Agricultural

· Bad debts

· Export credits, etc.

What is non-indemnity insurance?

Non-indemnity insurance is different from indemnity. In case of death, sickness or personal accident, no amount of compensation can equate the emotional disruption being experienced from the death of a loved one through sickness or accident, neither can being compensated counter-balance the pain experienced from a sickness, nor monetary payment from any insurance company compensate for the loss of a leg or an arm in an accident.

Here, the logic of compensation, no matter how large it may be, is to present the monetary payment to the insured as a form of “consolation” or “benefit” payment.

Let’s take it this way, if Mr. Adam takes non-indemnity insurance and after some years of paying faithfully the premiums, he has an accident and dies. The insurance company will pay Mr. Adam’s family, or whoever is the beneficiary, the sum-assured. The money being paid to Mr. Adam’s family cannot bring back Mr. Adam, his love for his family, neither can the money redeem the emotional pain being experienced by his loved ones nor compensate for Mr. Adam’s presence and his actions.

In case of loss of any of his limbs, no amount of compensation can erase the pains being experienced by Mr. Adam from the limbless-ness or the emotional imbalance resulting from becoming a physically challenged person. Any compensation paid to Mr. Adam by the insurance company in this case is in form of “benefit” or “consolation” payment.

Non-indemnity insurance consists of both life insurance and non-life insurance.

Non-indemnity life insurance exists in three forms:

Whole life insurance,

Term Insurance, and

Endowment insurance

Non-indemnity non-life insurance policies exist in two forms of:

· Sickness

A non-indemnity non-life insurance policy is the insurance policy taken because of any eventuality of any form of sickness. Let’s assume Mr. Adam takes a non-indemnity non-life insurance and he suddenly falls sick. The insurance company will pay his medical bills, and some other compensation as covered in his insurance policy. This may include, but not limited to, payment for the loss of remuneration during the period of sickness, etc.

· Personal accident resulting in death or disability

An insurance policy may also be taken as a protection against any personal accident. In a situation where a policy-holder has an accident and, as a result, loses a limb or dies, the insurance company will pay the insured amount (as in the insurance policy) to the benefactor i.e. the person (in case of personal accident resulting in losing of limb(s)) or the relative/person whose name is on the policy (in case of death).

However, apart from personal accident insurance, accident insurance includes and is sub-divided into:

· Burglary and ‘all-risks’

· Employer’s liability and public liability

· Contractors’ all-risks

· Motor

· Fidelity guarantee and contingency

· Livestock

· Glass

· Weather

· Engineering

· Travel, and so on.