Insurance is a financial product. Buying insurance helps you protect yourself against risks and financial loss. You can get insurance that will pay out money if you are too ill to work, or provide for your family if you die.
- When you buy insurance, you take out an insurance policy. This is a contract between you and the insurance company (the insurer).
- Your policy means you are protected against certain risks or situations, limited by specific terms that you agree with insurer. The protection offered by your insurance policy is called cover.
- You pay for your policy by paying premiums – these are payments you make to the insurer, usually every month. How much your premiums are will depend on your situation and what you are being insured for.
- If the event or situation you are protected against happens, you can contact your insurer to make a claim on your insurance policy.
- If the terms of the policy have been met your insurer will give you a payout.
- There are lots of types of insurance policy which will protect you against different things. It is very important to understand how you are protected, and how much money you will receive if you need to claim.
The different types of insurance include:
- Health insurance – this may pay you money if you become too ill to work.
- Life insurance – this may provide your family or partner with money if you die.
- Travel insurance – this may pay for medical treatment if you have an accident or become ill while you are on holiday.
- Car insurance – this may cover you if you have a car accident, car fire or your car is stolen.