What is Insurance?

- An insurance policy is legal contract between you (the insured) and the insurance company (the insurer).

- The policy specifies which risks the insurance company covers, under what circumstances the insurer will make a payment, and how much money, or what type of benefit, the holder will get if they make a claim.

- When the holder of an insurance policy experiences a sudden and unexpected event that costs them money, it’s called a loss.

- Following a loss, the policyholder can ask their insurance company to pay them for what they’ve lost. This request is called a claim.

- The amount of money or benefit you'll get if you make a claim depends on​ the amount of damage or loss to your car or home, and what is established in your policy.

Insurance premiums

- When you get insurance, you pay a fee called a premium.

- Usually, you pay the premium monthly or yearly.

- The amount you pay as a premium may change over time for some types of insurance.

- Insurance companies base the amount you'll pay as a premium on the amount they think they’ll need to pay if you make a claim. They may charge higher premiums if they think you are more likely to make a claim.

- When you pay premiums, your insurance company agrees to pay a certain amount of money for any loss or damages that your policy covers.

- The amount you pay as a premium also depends on factors such as your age, your gender, the amount of coverage you need, your claim history and more.

Exclusions

- Exclusions are things that your insurance policy doesn't cover. For example:

- A health insurance policy may exclude certain medical conditions you had before you applied.

- A travel insurance policy may exclude claims made if you travel to a high-risk country.

- A home insurance policy may exclude claims for some types of water damage.

- A credit card balance insurance policy may exclude claims for some types of illnesses.

Endorsements

- An endorsement, also known as a rider, is the ability to buy extra insurance at an additional cost.

- It covers risks that your basic policy doesn't cover.

- You can ask your insurer what your policy covers and doesn't cover.

- It will help you determine what risks you might need extra coverage for.

Determining your insurance needs

- When trying to determine your insurance needs, consider your circumstances and your life stage.

- For example, you may want to consider getting insurance if you’re moving in with your partner, starting a family, buying a home or renting a home or an apartment, starting a business, buying a new car, and taking a loan or getting a credit card.

Types of Insurance

- Health insurance is a policy or contract that gives you, the insured person, financial coverage to help pay for health-care needs.

- Life insurance is a policy or contract between you and a life insurance company that can last for the rest of your life or for a specific time period; which guarantees that your beneficiaries will get a tax-free cash payment (also called the death benefit) when you die.

- Car insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft.

- Home insurance covers the cost of repairing or rebuilding your home if it’s damaged by storm, floods, fire, lightning or subsidence (building insurance) and/or covers your possessions in case they’re damaged, stolen or lost. (contents insurance)

- Travel insurance is often purchased to protect you if problems arise while you are travelling.