Different types of Insurance Flashcards
Explain Car Insurance
It is a legal requirement which protects the driver, passenger and other road users in the event of a crash or accident. The degree of cover varies depending on whether the policy is third party or fully comprehensive.
What are advantages and disadvantages of Car Insurance
Advantages:
Meets the legal requirement.
Protects you against theft or damage.
Protects you against damage caused to third parties.
Disadvantages:
The premium can be high depending on the level of risk that has been assessed. (Younger men tend to have the highest risk)
What does Premium mean for insurance?
It is the amount of money that an individual or a business pays for the insurance cover, the money is paid in monthly amounts at a fixed rate.
What does Excess mean for insurance?
Excess is the amount that the person asking for an insurance claim has to pay the provider before they pay the rest. For example in a crash that costs £4000, with a £600 excess they would pay the £600 and the insurer would pay the remaining £3400.
Explain Home & Contents insurance
Home insurance covers the physical building itself whilst contents insurance protects the items within that home, these both might be damaged in accidents like a fire. Contents insurance also protects valuable items when they are outside the house.
What are advantages and disadvantages of Home & Contents insurance
Advantages:
Protect the user from house related damage costs that would be too expensive to pay otherwise.
Contents are protected both outside and inside the home.
Disadvantages:
Home ownership is expensive, even without the premiums for insurance.
Some items cannot be compensated beyond their value such as heirlooms or paintings.
Explain Life Insurance
Life insurance covers a specified period of the user’s life, if the user dies within the time period a lump sum of money is paid to a designated recipient. It is paid monthly at fixed amounts depending on the type of coverage - Mortgage lenders typically insist you have life insurance so it is paid off in if you die.
What are advantages and disadvantages of Life Insurance
Advantages:
Ensures family members who are dependent on the user are not left with financial struggles.
Disadvantages:
If the user does not die within the time period or dies under certain circumstances such as suicide, then no payment is made by the provider regardless of how much money is put in.
Explain Travel Insurance
It protects individuals or groups whilst abroad, this insurance can either be for a specific holiday, multiple holidays or all holidays within a year.
Insurance typically protects you against things like theft, illness, cancellations and other emergencies. Holidays like skiing that have higher risks attached will require additional or larger cover.
What are advantages and disadvantages of Travel Insurance
Advantages:
Protects personal belongings when away from home.
In countries with paid healthcare like America it pays medical costs.
Protects against cancellations and delays.
Disadvantages:
It is an additional cost when travelling abroad.
The person suffering the loss is likely to have to pay upfront to replace items or cover medical costs and then reclaim later.
Explain Pet Insurance
It protects the owners of pets against some or all of the expenses associated with treating ill or injured pets.
What are advantages and disadvantages of Pet Insurance
Advantages:
Avoids expensive vet fees
In some cases if vet fees are too high, there may be no alternative to having the pet put down – insurance can avoid this.
Disadvantages:
Another additional expense that is paid monthly.
Explain Health Insurance
This covers individuals, families or employees against medical expenses including assessments, treatments and loss of earnings. In the UK the National Health Service provides free medical care but individuals may wish to take out insurance to receive payments if, for example, time is spent in hospital, or to receive private treatment.
What are advantages and disadvantages of Health Insurance
Advantages:
Some compensation is provided when ill which can reduce the financial burden and stress allowing the patient to concentrate on recovery rather than financial worries.
If used to fund private care, this often results in quicker treatment and better facilities.
Disadvantages:
You are paying for something that you want to avoid using.
Premiums can be expensive depending upon the degree of cover required.
Will not cover pre-known conditions.
