Insurance policies are designed to help people save money on costs and services, and may even provide funds for spouses and/or surviving family members in the event an accident causes long-term or permanent injury, or even death. Understanding the different kinds of basic insurance policies available to consumers helps individuals and their families feel safer. A few of the most basic types of insurance include auto, life, health and long-term care.
Auto
Auto insurance is required in many states to help protect cars, property and people in the event of a car accident, regardless of who's at fault. Auto insurance policies offer comprehensive or collision (or a combination of both), liability only and medical coverage. Liability coverage helps pay for damage to another person's car but not your own, while comprehensive and collision (often called "comp and collision") helps pay for repairs or replacement of either or both vehicles in the event of an accident. Medical coverage is offered in all types of auto insurance, and pays a certain amount toward the medical care of any individuals involved in an accident.
Life
Life insurance comes in term, whole, universal and variable types. Term life insurance covers an individual for a limited period of time, most often between 10 and 30 years. Premiums can increase as the person ages, but term life is considered the cheapest life insurance policy. Whole life and universal life policies can last a person's entire lifetime, and come with more perks. Premiums are higher, but such policies also accrue cash value against which a person can borrow. Universal life policies have fewer choices regarding investment of premiums than whole life or variable life insurance policies. Variable life insurance policies are similar to whole or universal life, and offer policy holders a choice in where their premiums are invested for higher returns.
Medical
Medical or health insurance offers enormous savings to consumers, although premiums can be expensive. However, saving tens of thousands of dollars on hospital care, emergency room care or services, and chronic care such as heart or kidney disease, makes health insurance not only beneficial, but vital to many. Health insurance covers a broad range of services, and premiums as well as benefits depend on the carrier and the specific type of health insurance the consumer chooses, but most often cover costs of prenatal care and delivery, well baby checks, preventive care for children and adults, cancer screenings, and savings in office visits as well as a myriad of medical surgical treatments and procedures.
Long-Term Care
Long-term care insurance is designed to help provide services and care for seniors, especially those who may eventually make the decision to enter a long-term care facility or nursing home. These types of insurance policies offer different benefits and payouts depending on carrier and state, but most include partial or full coverage for those diagnosed with chronic illness or disabilities, and to help pay for services, in the home or in a care facility, for daily assistance in bathing, dressing and basic needs care. The Medicare.gov website states that nearly 12 million older adults will need care by the year 2020, and about 40 percent of those individuals will choose to enter a nursing home, where costs may reach $100,000 a year.
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