Getting the right insurance policy is a vital decision and makes up an important part of your financial plan. Insurance is the compensation paid by the insurer to insurance policy holder (insured) for suffering loss or injury due to unexpected events. The insured usually pays premium to the insurance company for covering the risks. There are many companies offering insurance plans and policies in different categories. You need to shop around to get the best deals which serve your purpose. Don’t let yourself feel stranded by purchasing a policy that will make you regret later.

There are several types of insurance plans but broadly insurance can be categorized into the following types-

• Life Insurance:

Life insurance takes care of your family members and dependents in your absence. You can decide the amount of sum assured depending on the needs of your household. By calculating the amount of money that can maintain the lifestyle of your dependents, you choose a life insurance policy.

It should be remembered that life insurance policy replaces an income and it is best to shop around before settling for a particular policy. Not everyone requires an insurance policy. If you do not have dependents and are young then opting for a life insurance policy may not make sense unless you want an additional income to pay off mortgage loans etc.

• Auto Insurance:

In United States, you cannot drive unless you are equipped with an auto insurance policy. This holds true for almost every part of the country. Auto insurance provides coverage for more than just repair or replacement of vehicles damaged in an accident. In fact, auto insurance extends financial relief and serves as a safety net. Your main aim will be to get an auto insurance coverage by paying lowest premium, to find a company that will keep its word and not make fake promises and a company that has a good track record in the past.

• Home Insurance:

A homeowner’s insurance policy will compensate for damages caused to your home or its contents due to theft, wind, fire, explosion and smoke. You should be very careful while choosing a home insurance policy. Unless a damage covered is not mentioned in the policy, it is usually not covered. The compensation that is being offered differs from one company to another. There are exclusions as well. You also get coverage if you own a condominium or an apartment. The same also holds true for rented premises. However, terms and conditions may vary.

• Health Insurance:

There are many health insurance policies that are offered by companies. A basic health insurance policy will cover expenses ranging from pre hospitalization to post hospitalization. It may also include expenses for pediatric care, X-rays, medical tests, surgery, maternity care and visit to doctors. There are few other health insurance plans like HMO or Health Maintenance Organizations, PPO or Preferred Provider Organizations, the Traditional healthcare plans and hybrid plans. Dental benefits, plans for prescription drugs and vision care etc are some of the other benefits that may be included in health insurance.

• Disability Insurance:

Disability insurance is the coverage that an insurance policy provides if you become disabled due to accident or injury. If you are unable to earn a livelihood due to an accident or poor health, your income is replaced by the disability insurance plan. Disability insurance plans can be for individuals or provided by an employer.

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