Reasons For Insurance
Insurance is a system of protection that works by spreading risks. People can protect themselves from financially damaging situations by paying an annual or monthly amount to an insurance company in return for the company's guarantee to pay for certain damages or losses. The following are reasons why it is important to take out insurance:
1. Insurance provides protection from unexpected events life throws at you. It safeguards your financial needs and the people and objects you care about.
2. While life might be fine at the moment having a plan in case you are injured of facing the end of your life helps secure your future financial needs.
3. Insurance gives you peace of mind from risks that you face in everyday life. You will not have to worry about medical fees, or repair costs if an accident was to occur.
4. Having an insurance policy helps with your investments and savings. Many insurance plans facilitate systematic savings by allocating funds in the form of premium every year. At the end of the policy term, the policy holder can reap the benefits by getting a lump sum payout. Also, by having insurance you don't have to use your savings to pay for costs should an accident occur.
5. There are tax benefits to taking out insurance.
1. Insurance provides protection from unexpected events life throws at you. It safeguards your financial needs and the people and objects you care about.
2. While life might be fine at the moment having a plan in case you are injured of facing the end of your life helps secure your future financial needs.
3. Insurance gives you peace of mind from risks that you face in everyday life. You will not have to worry about medical fees, or repair costs if an accident was to occur.
4. Having an insurance policy helps with your investments and savings. Many insurance plans facilitate systematic savings by allocating funds in the form of premium every year. At the end of the policy term, the policy holder can reap the benefits by getting a lump sum payout. Also, by having insurance you don't have to use your savings to pay for costs should an accident occur.
5. There are tax benefits to taking out insurance.
Types Of Insurance
Household insurance
Personal insurance
Motor vehicle insurance
Other
- Home insurance — covers a home against damage and destruction to the building from various causes, such as storms, fire or accidental explosions. It is very important that the inclusions and exclusions are very carefully noted; for example, most policies will not cover flood damage.
- Home contents insurance — provides compensation if your home’s contents (such as furniture) are damaged or stolen.
Personal insurance
- Life insurance — the most common form of life insurance is term insurance. This policy covers a person for a set time. If the person dies within this time span, the insurance company will pay a specified amount to the next of kin or other nominated person.
- Sickness and accident insurance — usually taken out by self-employed people who are not covered by workers’ compensation and do not receive pay for sick leave. It provides cover if a person cannot work and thus receive their normal income.
- Health insurance — in Australia, everyone is covered for basic medical costs by a government health insurance scheme called Medicare. However, if people wish, they may take out additional private health insurance cover to provide special benefits, such as orthodontic expenses.
Motor vehicle insurance
- Compulsory third party — protects drivers of motor vehicles from the high costs of compensation involved if they kill or injure someone in an accident. This insurance is compulsory and is obtained at the time of registering your vehicle by purchasing a ‘green slip’ from an insurance company.
- Third party property — a form of motor vehicle insurance that covers the same as compulsory third party, but also any property that is damaged in a motor vehicle accident other than damage to the insured’s own vehicle.
- Comprehensive motor vehicle insurance — this type of insurance covers the costs of repairs or sometimes the replacement of your vehicle and any other vehicles involved in an accident
Other
- Travel insurance - Most travel insurance plans are package plans that include various coverage like trip cancellation, trip interruption, trip delay, lost or delayed baggage, medical coverage, medical evacuation and other losses incurred while traveling
- Income protection insurance - Income Protection is exactly that - it replaces your income if you can't work due to sickness or injury. ... Income protection pays you a monthly benefit - just like your salary - and generally covers up to 80% of your pre-tax salary