The insurance market is indeed a very wide market, because just about everything we own can or should be insured. Since, naturally, there is always some risk of losing or damaging your property, or even your life, it turns out that there is type of insurance for just about every possession you might have. This is how wide the market is. Some types of insurance covers are compulsory by law, while others are about your choice depending on the country or state that you come from. Your Personal Financial Mentor takes you through some of the common insurance types and explains what they are all bout.
Life insurance is perhaps one of the most common types of insurance. When you take a life insurance cover, you cover yourself against any chance that you might die. Actually the beneficiaries of a life insurance are usually your next of kin. You are insured such that when you die, your next of kin will be paid a certain amount to help them move on with their lives. Life insurance is compulsory in most developed countries. A few years ago+ in some countries, controversy was witnessed when some insurance companies refused to cover HIV patients.
Car insurance is another common type of insurance which is also compulsory in most countries. There are other types of car insurance where the beneficiary is the car owner. That is, in case of any damage to the vehicle, the owner will be compensated such that they will recover the value of their vehicle.
Car insurance for public vehicles is a little different because the beneficiary is not the owner, but the passengers on board. This is such that when there is an accident with an insured public vehicle, the insurance company undertakes to compensate all the passengers on board at the time of the accident.
Another interesting type of cover is re-insurance. Re-insurance is when an insurance company decides to be insured too. The company transfers some percentage of the risks involved in their operations to another insurance company. This is such that if the risk occurs, the second insurance company will pay for part of the cost that will be incurred in compensating the client.
These are just a few of the types of insurance. Of course there are many others too but these are most common types.