Categorization of Insurance Companies
Categorization of Insurance Companies
Insurance companies are mainly categorized as non-life insurance and life insurance companies. Life insurance companies sell pension, life insurance and annuities while the general insurance companies sell a variety of products ranging from health, automotive, home and business insurance. Non-life and life insurance companies in most countries are subjected to different accounting rules, regulations and taxation. Most non-life products attract higher taxes and interest rates since they cover a short period of time unlike life products that are considered more long term. It is important to understand the different types of insurance companies to determine which one to visit when you are in need. The most common types of insurance companies and the services they provide are discussed below.
Life Insurance
Life insurance pays a certain amount of money to the person’s beneficiaries or other stipulated persons in the cover after the death of the policyholder. The policyholder pays premiums to the life insurance company over a specified amount of time so that the beneficiaries can either access this money as an annuity or as a lump sum. Annuities involve the insurance company issuing several payments over a certain period of time as opposed to one large cash payout. There are two types of life policies—permanent and term. The permanent life policy has no time limit and usually pays the beneficiary upon the demise of the insured. The term policy will only pay the beneficiaries if the insured dies within a stipulated time frame. For example, if the policy covers 15 years, the beneficiaries will only be paid if the insured dies within the 15 years.
Auto Insurance
Auto insurance is taken to protect the policyholder against any damages or injuries that occur during a car accident. The auto insurance companies provide this coverage in accordance to the state laws and requirements. In most cases, the premiums are payable after every six months to the auto insurance company or an agent representing various companies. Progressive and State Farm are some of the renown auto insurance companies in America.
Home Insurance
This insurance covers the home of the policy holder against destruction and damage caused by fire, theft, wind or lightning. In most cases, it does not cover the home against destruction by natural phenomenon such as flooding and earthquake, unless the homeowner pays a separate premium under a different policy. The homeowner will be compensated in the event that the home is destroyed by the specific hazards outlined in the cover.
Health Insurance
Health insurance is one of the widely used and covers both inpatient and outpatient charges of the policyholder. It caters for medication, consultation fee, doctor’s fee, admission fee, theatre fee and any other services offered during medical treatment. There is a maximum amount set by the health insurance provider that the insured can spend when seeking medical treatment. Most people in America access health insurance through their employers as the premiums for individual or family covers are too high. Some top companies that offer health insurance in America include Aetna Group, Unitedhealth Group and Wellpoint Inc. Group
Author’s Bio: Steven Brown is a renowned author who writes for Insurancecompanies.org. His articles have always been found useful by the readers.
Categorization of Insurance Companies
