An insurance policy is a legal contract between the insurance company (the insurer) and the person (s), company, or insured entity (the insured). Reading your policy helps you verify that the policy meets your needs and that you understand your responsibilities and those of the insurance company in the event of a loss. Many policyholders buy a policy without understanding what it covers, the exclusions that remove it, and the conditions that must be met for coverage to apply when a loss occurs. The SCDOI would like to remind consumers that reading and understanding your entire policy can help you avoid problems and disagreements with your insurance company in the event of a loss.
An insurance policy can protect you from the dangers of normal life, from floods and fires to car accidents and life-threatening illnesses. You can't prevent disasters from happening, but a good insurance policy can provide financial coverage for these unexpected expenses. Insurance is a financial safety net that helps you and your loved ones recover after something bad happens, such as a fire, robbery, lawsuit, or car accident. When you take out insurance, you'll receive an insurance policy, which is a legal contract between you and your insurance provider.
And when you suffer a loss covered by your policy and file a claim, the insurance pays you or a designated beneficiary, called a beneficiary, according to the terms of your policy. Life insurance provides financial protection to loved ones in the event of the policyholder's death. Once a policy is issued, the insurer cannot cancel it based on a change in the policyholder's health status. There are several types of life insurance, allowing consumers to find a type of policy that fits their personal situation.
Insurance policies come in a variety of shapes and sizes and come with many different features, benefits and prices. It is important to understand that multi-risk policies may have specific exclusions and conditions for each type of coverage, such as collision coverage, medical payment coverage, liability coverage, etc. In addition to death benefits, lifetime policies generate cash value, at which they are can access it during the life of the insured. As required by state law, whole life policies contain unforfeited securities that are paid in cash or some other form of insurance if the policy expires due to non-payment of the required premiums or if the policy owner decides to waive coverage.
If your parents, spouse, children, or other loved ones would face financial hardship if you died, life insurance should be high on your list of mandatory insurance policies. Most long-term disability insurance policies classify disabilities as self-employment or any occupation. Whole life policies are designed to increase the tax-deferred cash value, which is the accrual of premiums charged minus applicable expenses and applicable insurance charges, and allow you to apply for loans against the cash value of the policy. Consider hiring the service of an insurance broker, as they can search for policies from several insurance companies to find the coverage that best suits your needs.
Shop carefully, read policies, and talk to a licensed insurance professional to make sure you understand the coverage and cost. Protecting your most important assets is an important step in creating a strong personal financial plan, and the right insurance policies will go a long way in safeguarding your purchasing power and possessions.