Insurance law is the field of law that surrounds the practice of insurance, and its claims. To understand this topic let’s first get an idea of what Insurance is all about.
What is Insurance: Insurance is an agreement or a legal contract between two parties-the insurance company and the individual. it is also known as the insurer and the insured whereby the insurer compensates the insured for losses he may incur from accidents, property damage, illness, or even death. Usually, the insurance company does this through the premium paid by the individual.
Insurance policy: This is a legal contract that secures both the insurance company and the policyholder towards each other. It holds all the details of the contract which includes the conditions or circumstances under which the insured individual receives insurance benefits from the insurance company.
Insurance claims: This is a formal request by a policyholder to an insurer for compensation for a covered loss. The insurer has to validate the claim and, once approved, the payment is issued to the insured or an approved third party in place of the insured.
Types of Insurance law
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Insurance can either be private or public. Public insurance is insurance that is either subsidized or completely paid for by the government, while private insurance is entirely paid for by the individual or partly covered for the insured individual by private firms
Examples of public insurance include Medicare, children’s health, insurance program (CHIP)
Types of private insurance
Life insurance
This comes in two forms, term life insurance, and Permanente life insurance.
Term life insurance:
This is the most basic form of life insurance and the most affordable. Here, you can purchase policies for a certain period. If you die within the period of the policy, the insurance company will pay your beneficiary the face value of your policy
Permanent life insurance
In this type of life insurance, you pay a premium throughout your life span. Upon your death, the benefit is paid to your beneficiaries. It has three main types: whole, universal, and variable permanent life insurance.
Health insurance
Health insurance requires the insurer to bear the cost of a person’s health care depending on the policy.it usually covers the cost of hospitalization, surgeries, prescription drugs, and sometimes dental expenses where necessary.
Most times, it is included in employee benefit packages by employers as a means of keeping quality employees. The premiums are partially paid by the employer or directly deducted from the employee’s salary.
Disability Insurance
In a situation where an employee is unable to work as a result of an illness or accident, the disability policy covers a certain percentage of the employee’s salary on a weekly or monthly basis
For policies with longer periods for payment, the premium is lower. While policies with shorter periods of payments have higher premiums
Home Insurance
Home insurance is a type of property insurance that covers a personal residence. This insurance policy combines different personal insurance protection which includes losses occurring to one’s home and its contents, as well as liability insurance for accidents that can occur at the residence of the homeowner within the policy territory.
Additionally, homeowner’s insurance provides financial protection against disasters. A standard home insurance policy insures the home itself along with the things kept inside.
Automobile Insurance
This is perhaps the most common type of insurance as a major number of road users have their automobiles insured. The automobile policy covers the cost incurred through medical payments for bodily injury, property damage, damaged automobile, or complete loss of the automobile. In a situation where a lawsuit is filed for loss of life, the policy also covers it.
Education Insurance
This is an education policy often taken by parents to cover the cost of educating children in the long run. Should anything happen, the education of the children will not be jeopardized. This can also serve as an investment scheme.’
Here, you pay premiums from when your child gets to a certain age till a period of year stated by the insurance policy. The term of the policy is often determined by the age of the child and that of the payor. The minimum term is 10 years while the maximum is 25 years. This means that if a child is 2 years, he is allowed insurance up to a term of 23 years, while a 5-year-old is allowed up to 20 years as long as the payor will not exceed age 65 at maturity.
Benefits of Insurance
Some benefits of insurance include the following
- It provides protection
- It provides certainty
- 1t allows for risk-sharing
- It assesses the value of risks
FAQs: Types of Insurance Law
How do you cancel an insurance policy?
There is always an option of insurance policy cancellation when signing a contract. The policyholder must cancel an insurance policy according to the cancellation provisions of their contract. Often, some insurers allow policyholders to cancel by phone but some majorly require the request in writing.
What is Deductible? And why pay a deductible if the premium is paid?
Sometimes insurance is made, and the premium amount is less than what it should be. So, in such situations, you are required to pay the remaining amount before claiming the insurance money.
The extra amount you pay under such circumstances is called “deductible”. You can agree with your insurer to pay lesser premiums and higher deductibles.
There are uncertainties in life that cannot be predicted. These uncertainties may result in damages or loss of life. Having insurance is the most effective way to manage those losses. While the emotional and psychological damage cannot be compensated for with insurance, the financial loss can be.
