What Are the Six Types of Insurance?

Not having insurance can be costlymoney insurance image by Aleksandar Radovanovic from Fotolia.com

Life is filled with unforeseen circumstances. Having insurance can help defray some of the costs of mishaps that may happen either through nature, your own mistakes, or even a crime against you. There are six different types of insurance: life insurance, health insurance, car insurance, disability insurance , home insurance and business insurance.

Life Insurance

You can purchase a life insurance policy, which can be used to pay burial expenses as well as provide money to your survivors, including a spouse or dependent children. There are two types of life insurance: term and whole. Term insurance pays the face value of the policy, but whole life insurance builds up cash value, similar to a bank account. You can borrow against a whole life insurance policy, and if not paid back, it will be deducted from the face value of the policy. The policyholder is required to pay the insurance premium.

Consumers that do not have health insurance paid for through their jobs may be able to purchase health insurance. New health care laws in the U.S. will change some of the rules regarding health coverage. Basically, many jobs provide health insurance. The government provides health insurance through Medicaid for families below the poverty line, and Medicare for persons older than 65. An insured person also could purchase long-term care insurance to pay for nursing care.

Automobile insurance is mandatory in most states. It helps if you are involved in an auto accident. If you drive an automobile without having insurance, you could wind up being sued if found at fault in an accident. Conversely, having insurance protects you against an accident by an uninsured motorist. Automobile insurance paying a fee each year to receive basic coverage on your vehicle and/or comprehensive coverage.

Car insurance rates have different deductibles and rates are based on a driver's age, driving record, vehicle type and other factors. The policy may cover car repairs and defray medical bills if you are injured in an auto accident.

Disability insurance is prepaid by individuals or employers to cover periods when they cannot work due to illness or accidents. Other disability insurances are covered by California State and some other states for two years, which is a short-term disability. A longer term period is for life time disability, (LTD), which an individual can purchase through outside insurance. This is available in every state.
Employers also are required to provide workman's compensation insurance for employees to cover employees involved in work-related injuries.

Homeowner's insurance covers damages to a home from natural disasters such as a hurricane, flood, fire, or tornado. Homeowner's insurance usually covers theft, break-ins, or damages to the home and its contents. If a person falls on your property, homeowner's insurance may provide coverage and help you avoid liability.
Renters also can purchase special rental insurance to cover their belongings.

Business Insurance can cover damages to office equipment, furniture, and computers. It also covers liabilities that a business can incur, such as injury to an employee.