Insurance Basics

Businesses generally have risk management programs to limit their exposure to unforeseen risks that can affect their company such as employee or customer accidents. As individuals, we have personal risks that need to be covered such as our health, our home, and our family's future.

There are several types of insurance that an individual may purchase during their lifetime such

• Car insurance
• Homeowner's insurance
• Life insurance
• Health insurance

Generally, the two of the most important types an individual is most concerned about are life insurance and health insurance.

Life Insurance

Life insurance is not needed by everyone. It is generally used in estate planning where there are young children and a spouse or someone who is disabled. The life insurance benefits offer protection against financial upheaval if the main earner of the family passes away.

Sources of life insurance include individually purchased plans, employer-sponsored plans, and government-sponsored plans.

When an individual purchases life insurance, they do it through an agent or broker. If the individual is insurable, the individual decides on the amount of insurance coverage based on the premium they can afford to pay.

Employer-sponsored plans are offered through an individual's work. Most companies offer group term insurance policies.

Social Security provides survivor benefits. These benefits are based on the primary insurance benefits of the wage earner. The surviving spouse and/or unmarried children may receive the benefits if they meet the government's eligibility requirements.

Health Insurance

When considering health insurance, an individual is concerned about losing income if they become disabled and can not pay for ordinary medical expenses such as physicals and diagnostic procedures.

Sources of health insurance include individually purchased plans, employer-sponsored plans, and government sponsored plans.

Individuals usually purchase health insurance when they are not covered by a group plan with their employer or the policy they do have does not cover all the medical expenses they have.

Group plans are provided by most employers after the employee has been with the company for a certain period of time. The group plans generally extend to family members with the employee contributing an additional amount from their salary for coverage.

Social Security provides health insurance for disabled workers and for workers who retire at age 65 or later through Medicare. Medicare is used for doctor's visits and can be supplemented by other plans. Medicare also provides coverage for hospital stays.

It is difficult to take care of our family without some type of insurance benefits, especially health insurance. The costs of health care keeps rising and an insurance plan will help to defray those costs.