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What Is Insurance & How Many Types Of Insurance?

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By Author: Ken Adams
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Insurance can be defined as a “contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company” according to Investopedia.

What it means is that a person (the insured or the policy holder) makes small staggered payments to an insurer or insurance company – in return for the insurer’s promise to compensate the insured person in the event of a loss that has been covered by the policy.

There is a policy – which covers all the aspects, conditions and circumstances under which the loss can be compensated for. The staggered amounts that the insured person pays is called a premium. When there is an event that is covered by the policy, the insured person files a claim – this is then processed and the insured person is paid (or not – as the case may be).

There are several different types of insurance in the market today. The main ones are –
• Health Insurance
• Life Insurance
• Car insurance
• Home owner’s Insurance
• Disability Insurance

There are other minor insurance policies that cover other losses – loss of a person’s belongings when there is a theft or a break-in. There is travel insurance. Medical insurance when a person travels. And the like.

But why does a person need insurance, one might ask?

Simply because life is unpredictable – and anything can happen. And it is good to take some kind of measures to protect you or your loved ones at a time when things are not quite great. Apart from this –
• When a person buys life insurance, should anything happen to that person, his loved ones will get some compensation so they don’t have to deal with financial crises apart from losing their loved one. And the person who buys the policy can have peace of mind knowing he/ she has done what it takes to make sure his loved ones are provided for.
• Insurance policies are a great way to save. The staggered payments are made and at the end of the term, the policy holder gets a nice tidy sum of money.

And these days the whole process is simple and online! You can either talk to various friendly agents who can suggest the kind of insurance that is best suited for you. Or you can go online and read / learn all about the insurance that you are looking for. Study the various options and pick one that is best suited for your needs. And renewing a policy is easy too. It can be done online. All you do is log into the insurer’s website, enter all the required details and make an online payment. Simple as that!

Insurance is something that is essential in an adult’s life. It provides some kind of solace and peace of mind during times when things can go wrong.

More About the Author

I'm Ken Adams, an experienced financial consultant in Kuala Lumpur, Malaysia. I suggest financial services to my clients based on their financial situation.

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