Everybody wants to be financially secure, not just for ourselves, but even for our family members. It is a fact that applying for insurance can be one way of preparing for a healthy financial status. But a lot of people do not know much about insurance and just ignore it. Sometimes we just wait for fate and chance when emergencies or unexpected things happen. A few only know that insurance is a tool to lessen financial losses, it is a contract between an insured person and an insurance provider, wherein the insured is covered by a financial protection program in the event of loss, it can be a protection that can cover expenses related to damages and illness or losses in property and life and this protection can be granted for a certain period or even for a lifetime.
If you are planning to have insurance for yourself, it is not that easy to understand everything about it. Below is helpful information to look at and take note of with your insurance contract:
1. What are Premiums?
As an insured, you pay for premiums. Premiums are amounts that you need to pay on a periodic schedule and this depends on the type of insurance that you applied for. Several factors are considered in determining the amount of premium that you have to pay, these are the insurance owner’s age, health condition, land family health history. For property insurance, the amount of the premium will depend on the amount deductible, of which you are willing to pay for. The higher amount of deductible, the lesser your premium payments will be. In general, these premiums should be paid in return for the protection covered by the insurance policy that you have.
2. How Do I Determine My Premium Amount?
As a rule of thumb, you can decide on the premium amount based on the family’s annual cost of living, from here, you can work on the rule of compounding interest to determine how much amount of money do you need to cover your family’s future needs including added expenses when you get older. Keep in mind that day-to-day living changes, and so even your policy needs to be updated.
3. Can Your Money Earn?
When you buy insurance, you are investing your money among others who are also investors. The pool of money from all policyholders will then be used to fund a policy owner who experiences damage, loss, or death. But your coverage will be based on what is on your insurance contract. Pertinent documents will be required before you can claim the insurance company to provide payment for the loss. This will serve as a justification that the claim is valid and legal.
4. What are the Types of Insurance Available?
After getting the amount of premium that you need, then you can now check on the type of insurance that is suitable for you. Insurance companies will evaluate your application and see if you are qualified. Here are the criteria: Age, medical history, previous claims or policies, and the amount of coverage.
5. Life Insurance
This type of insurance protects the family of the insurance owner’s death. A beneficiary identified by the insured owner is stated in the insurance policy contract will be the only person who can receive the death benefit. Death benefits are free of tax.
○ Types of Life Insurance
One type of life insurance is a term policy. This policy is covered for a certain period. If the insured owner dies within the time coverage, the beneficiary will receive the death benefit. Once the policy has ended its term and the owner is still living, it is renewable but the premium amount may change because the insured owner’s age has changed by then. Another type is permanent life insurance, which covers the owner a benefit for a lifetime as long as the premiums are paid for regularly. This can offer a guaranteed minimum amount of cash value and a death benefit or there is also another option which is a combination of both life insurance and investment.
6. Health Insurance
Health insurance can pay for medical or dental expenses that ordinary or local health care benefits cannot offer. Some companies provide health insurance benefits for their employees, to lessen the company’s expense if an accident, sickness or injury occurs as a result of doing a job, or even outside of the company premises, this serves as an incentive to entice employees. If your employer does not provide this, consider getting this type of insurance for yourself. When you apply for one, check on the coverage. Health insurance should pay for expenses incurred when you undergo laboratory, medical and surgical procedures. You may also find out if your insurance will pay for rehab or consultations with your medical practitioner. In claiming for the benefits, health insurance would require preauthorized claims.
7. Property and Casualty Insurance
Insurance whose coverage is damage to properties like house, car, or business. Casualty insurance protects the insured from any liabilities for losses that can be a result of an injury caused to another person or damage caused to another person’s property. Coverage limits apply to both property and casualty insurance. Check with the insurance provider the extent to which this protection can be applied.