What is Insurance & Types of Insurance
In life there can be many random situations in which having insurance is the solution, whether to cover economic, personal or health aspects. Every day we are exposed to suffer some damage and, as if this were not enough, we must take into account the economic impact that can entail repair or solve the damage suffered.
Therefore, one of the best ways to cover all contingencies and their cost is through the purchase of insurance. In this post, we highlight what insurance is, what insurance policy entails and the different types of insurance.
What is Insurance?
Insurance is an agreement made by a person with an insurance company so that if the individual or company suffers any damage and it is covered in the insurance contract, it can be fully or partially compensated. The insured, in exchange for the coverage offered by the insurance company, pays a periodic premium to the insurer.
There are some insurances such as car insurance, civil liability insurance, dangerous dog insurance and home insurance of a mortgaged home, which are compulsory insurance by law, so yes or yes you should hire them.
What is an insurance policy?
Insurance policy is the document that details the insurance contract in which all the coverages agreed between the insured person or company and the insurance company is found. The insurance policy is characterized by having all the rights and obligations between the parties. Below we can see the basic information provided by the insurance policy :
- Personal data of the insured and the insurance company
- A detailed description of the insurance contracted, as well as possible details to consider
- Amount of the premium to be paid and the periodicity of your payment
- The validity of the insurance: duration and date from which it is effective
- Sum assured
- Benefits and endorsements, that is, the additional coverage contracted or modifications made
- Beneficiaries of the insurance in the event that there are any, which will be the ones that will receive the compensation
Who is involved in an insurance contract?
Below are the parties involved in an insurance contract:
- Insurance company: a company that provides insurance services and is obliged to indemnify the insured in the event of the event insured in the contract.
- Insured: the person holding the insurance contract and who is also exposed to the risk.
- Contractor: the person who signs the insurance policy and is responsible for paying the premium (compensation for the insurance policy, is calculated based on the calculations of the eventuality of the accident and the client’s insurance history).
- Beneficiary: the person who is compensated according to the conditions established in the insurance contract in the event that the event occurs.
Deadlines to consider in the insurance contract
- Acceptance period: this is the time between the insurance company proposing an insurance offer and the person who wishes to take out the insurance accepts the offer. Normally the acceptance period is fifteen days.
- Lack of coverage: this is the period between the policy being formalized and the date on which insurance coverage begins. During this period, the insured does not have coverage.
- Grace period: it is about 30 days after the payment of the premium or the periodic policy, in case the insured has not made the payment. During this time, the insured will be covered.
What types of insurance exist?
When hiring insurance, we must take into account what type of insurance we want to contract based on our personal or professional needs. Insurance is classified among personal insurance, insurance or property damage and insurance service delivery.
- Life insurances
- Personal Accident Insurance
- Health or illness insurance
- Dependency insurance
Damage or property insurance
- Car insurance
- Engineering insurance
- Multi-risk insurance
- Credit and surety insurance
- Insurance of various monetary losses
- Theft Insurance
- Transport insurance
- Fire insurance
- Liability Insurance
Service provision insurance
- Travel assistance insurance
- Death Insurance
- Legal Defense Insurance
Despite all the insurances mentioned above, there is a wide variety of insurances within each typology that we can access based on our needs. It is important to know, above all, what risks we are exposed to and compare what it would cost us to face the cost of one of those risks and, on the other hand, what we would save if we took out insurance.
Finally, to highlight the fact that more and more insurance meets our needs, we can for personalized insurance in which only the coverage that suits you is found.