Types of Personal Insurances

Types of Personal Insurances

There are many types of insurance in the United States; here is a brief about all the different types of personal insurances that you can opt for:

Health Insurance: You can enroll in a health insurance program to get protection from all your health-related adversaries. One of the most common insurances is dental insurance. In order to keep your subscription active with the insurance company, you need to make periodic payments called premium. There are others like eyes, certain medications, and other parts of your body. Insurance company puts forward certain terms and conditions for you to be eligible to get that insurance. It is essential that the conditions must be met or else you will not get the claim amount for your loss.

Life Insurance: Life is unpredictable so you must be well prepared to deal with all the circumstances when you are not there. There are various insurances like accidental death, hospital indemnity, dismemberment, and long-term care. You can virtually be at peace within your heart while you are spending your lifetime. Life policies keep you secured against all unforeseen conditions. You can secure your dear ones’ future even in your absence. Just like health insurance, you need to pay premiums for this policy too. There are different policies in life insurance as well. The two major categories of life insurance are lifelong and limited period insurance. As the name suggests, one is valid for your entire life, and the other gives coverage for a limited number of years.

Annuities: Annuities are not exactly like insurance, but they work similar to insurance. An annuity is an agreement with the insurance company. There are two types of annuities – Deferred Annuity and Immediate Annuity. A deferred annuity keeps accruing earnings on a tax-deferred system. An immediate annuity is an instrument that changes premium in a series of payments spread over a period of time till the annuitant survives. Your nominee is also entitled to get the entire amount of accumulated money and earnings (if there are any).

In a Deferred Annuity, you make a lump-sum payment or periodic payments to the insurance company, which accumulated earning at a fixed rate or a variable rate depending on your choice of options called the subaccounts. Gradually, when you have some deferred annuities, you can withdraw a percentage of it along with earnings without surrendering the contract. You get the full cash value at the end of your annuity period. In the event of your demise, the amount is generally given to your beneficiary along with any earnings made on the accumulated amount.

An Immediate Annuityis an agreement in which you pay a single lump sum amount of money in exchange for a promise that you will receive fixed payment during the entire life. The payments are considered on a number of factors like age, sex, and other conditions like whether the payments will be made for a limited time or the entire lifetime.

An annuity may look like a guaranteed type of insurance. The guarantee is entirely based on the ability of the insurance company. A deferred annuity promises that your beneficiary will at least receive the original amount that you paid as principal even if the accounts you invested in did not perform well. Deferred annuities are generally purchased by people who are looking forward to saving money for their retirement. Immediate annuities are taken by people who look forward to a guaranteed income during retirement.

Variable annuities are long-term investments, which are suitable for retirement planning. All the variable annuities are subject to market risk, investment risk, and even the chances of losing the entire principal. Variable annuities also involve numerous charges and fees. You should always consider the risk viability and objective. Variable annuities are actively sold by a prospectus. The brochure has the entire necessary information requirement to understand the investment option. You should always read the prospectus careful and estimate the chances of success. You might even want to show the prospectus to your finance professional and seek his advice on the various options available.  You can end up making a good amount of money for all the money you invested. However, you might also suffer a drastic loss for which you should be vigilant and invest wisely.