Types of Insurance (Health, Life, Property, and Auto)

FUTURE TECH - SHAHID

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Transcript

00:00Most of us know of the concept of insurance, but what is it exactly? When you possess

00:11something valuable that could be lost, and you can't afford to pay for its loss yourself,

00:16you can pay for insurance. In the simplest terms, insurance is financial protection against losses.

00:23If you want insurance, you usually have to sign a contract with an insurance company,

00:27and that contract describes the specific policy meant to protect you in a crisis.

00:33After you sign the contract, you have to pay a fee per month or year in order to remain protected.

00:39That fee is called a premium. You may also be responsible for an insurance deductible,

00:44which is the amount you must first pay before the insurance company starts to cover the costs

00:49of the policy claim. Insurance companies may also limit what they pay out to you.

00:54A policy limit is the maximum monetary amount that an insurance company will pay out

00:59in relation to a claim. In certain cases, it's against the law to not have insurance.

01:05This is essentially to force citizens to be responsible. The minimum insurance one gets

01:10is often called liability insurance. Liability insurance policies cover any legal costs and

01:16payouts an insured party is responsible for if they are found legally responsible for damage.

01:22So governments force you to have insurance when they think you might try to get out of

01:26paying for damage that you clearly caused. While there is a wide range of types of

01:31insurance policies available, in this tutorial we will focus on the four most common types.

01:37Health insurance, life insurance, property insurance, and auto insurance.

01:42Health insurance is insurance for medical and surgical expenses. Because medical and

01:47surgical care is often necessary in order to stay alive, it is incredibly important,

01:53but it can be expensive. In addition to monthly premiums, policy limits, and deductibles,

01:58health insurance plans often require coinsurance and copays. Coinsurance is a percentage of

02:05healthcare costs that the insured must pay even after they've met their deductible. A copay is a

02:11fee that the insured must pay for certain services such as doctor visits and prescription drugs.

02:18Often the consumer can save money on their monthly health insurance premiums

02:22by enrolling in a high-deductible health plan. However, that can be quite risky if there's an

02:28accident, as the insured would be responsible for paying a large amount of money before

02:32their insurance benefits kick in. Because healthcare costs have skyrocketed in recent

02:37decades, and because most people view healthcare as a right instead of a privilege, citizens in

02:43most developed countries have agreed to make healthcare a public good. Most developed countries

02:49have a version of universal healthcare coverage, which is a healthcare system in which all

02:54residents of a particular country are guaranteed access to healthcare, regardless of income.

02:59Life insurance is insurance for the loved ones of the insured in case they were to die. When you

03:05sign a life insurance contract, you describe your loved ones as beneficiaries. If you were to die,

03:11whoever you named as a beneficiary would receive the policy's face value, or death benefit. Generally,

03:18the higher the life insurance premium you pay, the higher the face value of the policy. In addition,

03:24the older you are, the higher the life insurance premium you pay, as it is assumed that you are

03:29more likely to die. The insured can often choose between term life insurance and permanent life

03:35insurance. Just like the names imply, term life insurance lasts a few years, while permanent life

03:42insurance stays in force for the insured's entire life, unless the insured stops paying premiums.

03:48Property insurance is insurance for your most valuable property. Typically, it covers damage

03:54that results from certain natural disasters, theft, or vandalism. The most common type of

03:59property insurance is homeowner's insurance, but many also have renter's insurance, flood insurance,

04:06or earthquake insurance. With homeowner's insurance, not only is your home protected,

04:11but also your personal belongings inside your home. One common example in which homeowner's

04:17insurance comes into play is if your home was to catch on fire. If fully insured, you would get

04:22money to repair the house or purchase a new one, and additional money to replace the lost

04:28possessions that were in the house. Auto insurance is insurance for cars, trucks, motorcycles, and

04:34other road vehicles. Why do we need auto insurance? Automobile crashes are the most common cause of

04:41accidental death in the world. Even though most of us are in vehicles every day of our lives,

04:46it is a fairly risky thing to do. Therefore, most countries in the world have laws that require

04:51drivers to get auto insurance. This is to cover the cost of damage to vehicles in an accident,

04:57and also medical bills associated with injuries from an accident. It also covers vehicle damage

05:03from natural disasters like hail, earthquakes, fires, and floods. People are able to get different

05:09types of insurance from the same company, and bundling can also save you both premium and

05:14deductible costs. Before you sign a contract with an insurance company, make sure you carefully read

05:20over the terms. In particular, watch out for exclusions, or items not covered as part of your

05:26insurance policy. Also check for waiting periods, or amounts of time that must first pass before

05:33your insurance kicks in. Finally, consider the following questions before deciding what kind of

05:38insurance coverage you will need. How much risk or loss of money can you assume on your own?

05:44Can you afford higher deductibles in order to reduce your premium costs? Do you have special

05:50needs that require extra coverage? Which emergencies are you most worried about actually

05:56happening? As with anything in economics, your choices regarding different types of insurance

06:01coverage come with risks and rewards. At the very least, you should be prepared to have insurance

06:07for your most valuable assets. This includes being able to take care of yourself and your loved ones

06:14in case a major issue does occur.

06:21Support me on Patreon so I can keep making content,

06:24and as always, feel free to email me.

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