What Is Insurance? How Does It Work? Types of Insurance

Insurance is an important part of any financial plan. It helps pay for things that would otherwise cost money, such as medical bills, car repairs, and property damage.

Auto Insurance

Auto insurance protects people who own cars against financial loss caused by accidents.


Homeowners Insurance

A homeowner’s policy covers damage to a house and its contents. If you have a mortgage, you will need to purchase additional coverage called “flood insurance.”

Life Insurance

Life insurance provides financial protection for your family after you die. You pay premiums throughout your lifetime, and when you pass away, your beneficiaries receive money based on how much you paid into the plan.

Health Insurance

There are two main types of insurance: health insurance and life insurance. Health insurance covers medical costs, while life insurance pays out benefits upon death.

Business Insurance

While both health insurance and life insurance cover similar things, there are some key differences between them. For instance, health insurance typically has higher deductibles than life insurance. This means that people with health insurance must pay a certain percentage of their total bill before their insurer will pay anything. In contrast, life insurance usually has lower deductibles than health insurance. This means that when a policyholder dies, the beneficiary receives money immediately.