Monday, October 12, 2009

What Are the Functions of Insurance?

The function of insurance is to provide indemnity, or reimbursement, in the event of an unforeseen loss or tragedy. There are different types of insurance policies to cover almost anything you can think of, and countless companies that provide the necessary policies.

Automobile Insurance


The function of auto insurance is to provide protection in the event of an automobile accident or other incident involving a motor vehicle. The policy is designed to pay for damage to property as well as medical expenses of injured parties.

Homeowner's Insurance


Homeowner’s, or property, insurance protects your house or other real estate from unexpected damage or malicious actions. If your home is damaged, vandalized, or robbed, the functions of insurance for your home are to provide funds, typically in the form of reimbursement, to repair or replace those items affected by the incident.

Life Insurance


Life insurance provides a lump sum of money to your chosen beneficiaries in the event of your death. Some types of life insurance expire after a certain number of years, while other types last forever.

Health Insurance


The functions of insurance related to medicine are to offset the cost of well visits, sicknesses, and major health occurrences. Health insurance pays the bulk of your medical expenses when you need treatment. Most policies limit your potential expenses to relatively minor deductibles and participation costs called co-pays.

Disability Insurance


Disability insurance pays you a monthly benefit if you get injured and are unable to perform the normal functions of your job. These payments will continue until you are well again or until you exhaust your benefits.

Long-Term Care Insurance


If you need to stay in a nursing home or assisted living facility, long term care insurance will pay a daily or monthly benefit toward the cost of that care. These payments will continue until you no longer need that care or until you have exhausted your benefits.

Article originally published on eHow Money (10/12/2009)

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