Types of Insurance-Insurance is not something many people are knowledgeable about. If you do end up needing insurance, it can be a stressful time for all involved. This guide will provide information on the basics of what an insurance agent does and how they work with clients in order to get coverage.
As we continue our journey through life, things happen that may require us to take out policies or go through the process of getting one. But researching which type best meets your needs can feel like a daunting task. This guide will provide details on the 7 different types of insurance that are available to help you make a more informed decision.
SEE ALSO:Top 20 Insurance Companies In Nigeria
The following article provides information on the basics of what an insurance agent does, their responsibilities and how they work with clients.
How Does Insurance Work?
When it comes to insurance, many people don’t really understand how it works. The fact is, insurance is a way for companies to share risks and protect themselves from potential losses. In the event that something does happen and the company suffers a loss, they may be able to get money from their insurance company to help cover the costs.
SEE ALSO; How to Choose the Best Life Insurance Plan in Nigeria
In order for this system to work, both the company and the insurance company need to agree on some terms. The company pays premiums each month or year which are used to cover any potential losses suffered by the insurance company. This helps reduce the overall risk of a single client losing something significant at any given time.
There are different types of insurance policies available, including auto insurance which has minimum requirements set out by law. It’s important for everyone to have some form of coverage in case something happens – after all, accidents can happen to anyone.
7 Basic Types of Insurance
1. Life Insurance or Personal Insurance.
There are two types of life insurance: traditional whole life and term life. Which one you choose depends on your needs and budget.
Traditional whole life is the best option for people who need an income tool as well as insurance protection. It covers you for your entire lifetime, so you never have to worry about being uninsured.
Term life is good for people who want coverage only until they reach a certain age or die. It is much less expensive than traditional whole life, but it does not provide an income stream if something happens to you.
Age, occupation, and number of dependent children are the three factors to consider when deciding between Whole Life Insurance and Term Life Insurance
2. Property Insurance
Property insurance protects your home and its contents in the event of a fire, theft, or other covered disasters. It is important to have property insurance if you own a home, as the cost of repairing or rebuilding can be expensive. Your policy will also reimburse you for any lost possessions.
There are two main types of property insurance: homeowners insurance and renters insurance. Homeowners insurance covers damage to your home, while renters insurance covers your personal belongings in the event of a covered disaster.
It is important to read through your policy carefully to make sure you understand what is and is not covered. Be sure to ask your agent any questions you have about coverage.
3. Marine Insurance
One common type of insurance in marine insurance. Marine insurance protects the financial interests of a business or individual with regard to losses incurred while the policyholder is operating a vessel on the water.
Marine policies can be tailored to protect the policyholder in a number of different ways, including:
- The value of the vessel being protected
- Liability for damage caused by the vessel
- Coverage for lost or damaged cargo
- Insurance against crewmembers becoming sick or injured while at sea
4. Fire Insurance.
Fire insurance is a type of property insurance that covers losses caused by fire. It is usually purchased by business owners and homeowners. Fire insurance policies typically cover the cost of repairing or rebuilding a structure, as well as the contents inside.
Most states require businesses to have fire insurance. Homeowners are not always required to have it, but it is recommended, especially if you live in an area where there is a high risk of fire.
There are two types of coverage: first party and third party. First-party coverage pays for damages to your own property. Third-party coverage pays for damages to someone else’s property.
It’s important to read your policy closely to make sure you understand what is and isn’t covered. You should also ask your agent about any endorsements or riders that can be added to your policy for extra protection.
5. Liability Insurance.
All businesses should have general liability insurance. This type of policy protects a company from claims made against it and from damage to its premises. General liability insurance does not cover employee injuries, auto accidents, or professional mistakes.
General liability insurance exists to protect a business from harm caused to customers or clients. It is important to note that professional liability insurance is necessary for professionals who deal with the public. This type of coverage is not included in any other policy.
6. Guarantee Insurance
Guarantee insurance is a type of insurance that protects the policyholder against losses if the person or company they are doing business with fails to meet their obligations. For example, if you are a contractor and the company you are working for goes bankrupt, your guarantee insurance would cover any losses you incur as a result.
There are two types of guarantee insurance: performance and payment. Performance guarantee insurance protects the policyholder from losing money due to poor workmanship or failure to complete the project. Payment guarantee insurance covers losses incurred when a supplier or vendor does not pay for services or products provided.
SEE ALSO:How to Choose the Best Life Insurance Plan in Nigeria
Both types of guarantee insurance are commonly used in construction and engineering projects but can be used in any business deal where there is a risk of non-payment or poor workmanship.
There are different types of insurance policies, and one of them is called a guarantee insurance policy.
This type of policy covers the cost of repairing or replacing something that was insured, up to a certain amount.
It’s important to note that this policy does not cover the cost of damages due to an accident or natural disaster- only accidental damage or loss is covered.
Guarantee insurance policies are often used for high-value items like jewellery, art, and antiques.
What is permanent or whole life insurance?
Permanent life insurance, also known as whole life insurance, is a type of policy that provides coverage for the insured person’s entire lifetime. These policies also build cash value, which the policyholder or their heirs can access under certain conditions. Permanent life insurance comes in many subcategories, with varying features and premiums that depend on the type of product purchased.
Whole life insurance provides coverage and death benefits that last a lifetime. Whole life/permanent life policies offer the potential for tax-deferred savings growth via cash value, which is less in comparison to term life policies of the same amount of money.
A whole life policy offers consistent premiums and benefits over time versus the risk from unpredictable term insurance rates during your lifetime.
The purpose of permanent life insurance is to provide a lump sum amount of money that is tax-free in the event of death. Permanent life insurance can also be used as an investment or savings tool, with a higher return than other savings options
When Should You Buy Insurance?
There are a few key moments when you should consider buying insurance:
- When purchasing a high-risk item or property
- When required by a lender as part of the loan agreement
- During major life changes, such as getting married or having children
- When an incident has already occurred and losses need to be covered
