What are common types of insurance?

There are many types of insurance, but some common types are described here.

§ Health Insurance: Helps you pay for doctor's fees and sometimes prescriptions

drugs. Once you have purchased health insurance coverage, you and your health insurer

each agrees to pay a portion of your medical expenses—usually a certain dollar amount

amount or percentage of the expenses.

§ Life Insurance: Pays a beneficiary you choose a set amount of money if or when

you die The money from your life insurance policy can help your family pay

bills and cover living expenses. There are different types of life insurance.

One is term life insurance, which only pays out a benefit if the insured person dies

during the term of the policy (usually from one to 30 years). Another is whole

life insurance, which pays a benefit when the insured person dies.

§ Disability Insurance: Financially protects individuals and their families

suffer when illness or injury prevents them from earning a living. Very

employers offer some form of disability coverage to employees, or you can

buy an individual disability insurance policy.

Summer 2022

BUILDING BLOCKS STUDENT DISTRIBUTION 3 or 3

What is insurance?

§ Car Insurance: Protects you from paying the full cost of vehicle repairs and

medical expenses due to a collision. In most states, the law requires that you

car insurance when driving a motor vehicle.

§ Homeowner's or renter's insurance: Covers your home and the personal

possessions inside in case of loss or theft; help pay for repairs and

replacement. If you have a mortgage on your property, most lenders require

you must have homeowners insurance. If you rent, the landlord may require it

you must have renter's insurance.

What should you consider when buying a

insurance policy?

A useful rule of thumb to live by is to do your homework before buying insurance. Research

any insurance company you are considering buying to be sure that the

company is financially sound and provides good service. Also find out which factors

case so you can get the coverage you need at the best price.