Types Of Insurance
1. Life Insurance: The purpose of life insurance is to provide for the family in the absence of the earning member of the family. It does not make sense to insure the non-earning members of the family, except to the extent of the additional cost the family would have to bear in the absence of the individual (eg. child care for the children when the home maker is not around). Life insurance can be pure insurance, also called term insurance, which pays only on the death of the insured, or cash-value insurance, which has a savings component attached to the life insurance. With life-value insurance, a portion of the life-insurance premium is invested to provide you with a lump sum at maturity, when the life cover ceases. In general, cash-value insurance does not provide flexibility in your investment choices. It makes sense to opt for a cash-value insurance only if you have trouble saving anything at all from your income - and only because you are less likely to default on life insurance payments! 2. Health Insurance: Health care costs being what they are, it makes sense to have a health insurance policy to take care of unforeseen health care costs. You should undertake an annual review of your health insurance as health insurance costs increase at about 15 to 20% per annum, about 3 to 5 times the inflation rate! 3. Disability Insurance: Usually available with an accidental death and dismemberment cover. You should have a death, dismemberment and disability cover to cover the loss of earnings in case of accidental death. Short-term disability insurance starts within days of disablement. Long-term disability insurance usually has a waiting period of 90 days or more. Both are usually available together. 4. Home Insurance: Protect your investment in your home. In case of an unforeseen event, like an earthquake or a fire, a home insurance policy can provide protection from loss. 5. Vehicle Insurance: Some minimum insurance for your automobile is often mandatory. You may opt for additional cover to protect your investment in your vehicle especially so if it is expensive. 6. Property Insurance: You should have some cover for your home as discussed in home insurance above. In addition, you may need cover for your investments in other kinds of property eg. your painting collection or your investment property.
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