Insurance plays a crucial role in safeguarding your financial well-being against unforeseen events. Here’s a breakdown of the essential concepts you should know:
1. What is Insurance?
Insurance is a contract between you (the policyholder) and an insurer, where you pay regular premiums, and in exchange, the insurer provides financial coverage or compensation for specific risks or losses. These can include anything from accidents and health issues to natural disasters or theft.
2. Types of Insurance
Health Insurance: Covers medical expenses, hospital stays, and treatments.
Auto Insurance: Protects against vehicle damage, accidents, and liability.
Homeowners Insurance: Provides coverage for property damage, theft, and liability within your home.
Life Insurance: Pays out a sum to beneficiaries in the event of the policyholder’s death.
Disability Insurance: Replaces lost income if you’re unable to work due to injury or illness.