Some events in life are just unpredictable. It is due to circumstances beyond our control that the concept of insurance was born. To protect one’s future from a variety of risks, purchasing different types of insurance policies become mandatory. If you aim to protect your financial future, secure assets, as well as protect yourself and your loved ones, there are three types of insurance that should be at the top of your priority list.

•    Health insurance
    •    Home insurance
    •    Auto insurance

Insurance is effective due to its inherent quality of risk pooling and risk sharing. These terms simply mean that a large number of individuals who have bought protection against a particular loss are required to pay premiums into an insurance pool. Since there are a large number of individuals that enrolled under a certain policy, insurance firms are able to utilize statistical analysis to predict potential losses within a given classification.

Obviously, not all individuals enrolled under a given policy will be suffering identical losses at the same time or at all. This fact alone makes it possible for insurance firms to profit as a business while having the ability to cover for claims by policy holders as well. For instance, a large number of people obtain home insurance, but only a few actually suffer from fire, theft, burglary, or floods. In essence, policy holders pay for the probability of a loss and for guaranteed protection and assurance that you will get paid in the event the unfortunate does occur.

Types of risks:
Life is truly full of risks, more often than not, they happen in the most unexpected times. Some of these risks can be avoided, prevented, reduced, or eliminated altogether.
When shopping for insurance; such as in the case of auto insurance, health insurance, and home insurance, customers need to identify the type of risks, the effects or complications of such risks, the cost of risks, and ways on how to mitigate the risks as well.
In the case of auto insurance, there are a variety of risks that one needs to be aware of:

•    Bodily injury
•    Damage or totaled vehicle
•    Necessary car repairs
The side effects of exposure to risks:
•    Hospitalization
•    Expenses associated with car rental
•    Auto loan payments for a vehicle that does not exist anymore
The costs:
•    Depending on the severity of accident or injury, the costs of the risks mentioned above may be for a few hundred to thousands of dollars.
How to Mitigate Risks:
•    Totally avoiding the risks by not driving at all and taking commute instead
•    Practice safe driving
•    Transfer of risks to someone else, in this case, to an insurance firm

Motorists have the option of avoiding the risks altogether by not using their car. This is a hard approach, especially to individuals who lives far from work or needs to drive in order to perform important tasks. Car owners may also reduce their risks by driving safely and following traffic rules and regulations. These two methods are known to be risk control and may only be effective for a small number of people.

Majority of vehicle owners do is to retain their exposure to such risks, and buy auto insurance instead. By transferring the risks to an insurance company, all that a policy holder will need to do is pay monthly premiums in a timely manner. Voluntary retaining of skills such as accepting all responsibilities in the event of an accident may not be the smartest and most sensible step to take as this is very costly on the long term

House Insurance

The minimum requirement for a home insurance policy is to cover for fire and other forms of property damage to your home. House insurance cares of full replacement or may also be indemnity wherein the insurance firm will only pay for the insured value at that time.
Individuals who are looking into applying for a mortgage soon should realize that an auto insurance should be purchased during approval or upon closing of the mortgage deal.
There are two types of coverage of home insurance, namely buildings and contents insurance. As the name implies, the buildings policy covers for the physical structure of the home. The objects which are deemed valuable by the homeowners are protected by contents coverage. Aside from covering for damages and loss of valuables, contents insurance also serves as a third party cover if a home insurance policy owner damaged the valuables or belongings in someone else’s house or property.

Health Insurance

Considered as the most important insurance product that everyone should have, health insurance should never be left out when looking to buy a tool for future protection and security. Heath care is expensive, and a simple visit to the doctor means thousands of dollars for services and professional fees. Do not out your family’s future in peril and in debt , when you can prevent it altogether by purchasing health insurance.

In exchange for premiums, health insurance covers for medical products and services- from simple check up to prescription medicine. Monthly or annual premiums paid are equivalent to a contract made the insurer with health care professionals and hospitals. The health care providers under the insurer’s network are obligated to render their services as well as products at a discounted priced to policy holders.

The health care services feature predetermined rates which in turn guide policy holders accordingly when getting their diagnostic exams, surgical procedures, or simple annual physical checkup with a health care provider under the insurer’s network. Just like any other type pf insurance product in the market, health insurance policies feature limitations as well as exclusions too.

The coverage or extent of service largely depends on the type of plan a policy holder is under. The amount of premium, deductible, co-insurance and co-pay also dictate the final out-of-pocket expenses that will be made by a policy holder. Remember that regardless of the level of comprehensiveness of a health insurance plan, policy holders will always be required to shoulder a portion of the total expenses. Health insurance may be employer-issued or purchased privately by individuals as well.

The most common types of health insurance are:
•    Indemnity plan or fee-for-service health insurance
•    Health maintenance organizations (HMOs)
•    Preferred provider organization (PPO)
•    Point of Service (POS)