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Give details of the major types of personal insurance and explain their purpose.
There are many types of personal insurance covering a broad range of subjects. The main types of cover include insurance on house, medical and life as well as income protection. There are many more insurance policies for the individual covering a wide array of personal effects and these are becoming increasingly more popular but cannot yet be thought of as a main type of insurance. These insurance policies have many general purposes none greater than providing cover to reduce the risk of the individual and the individuals’ belongings. This cover of risk involves a process called risk transfer and is the desired purpose of a persons’ insurance.
The first transfer of risk that many people choose to effect is that of house insurance. House insurance is the one of the most prominent insurance policies as it gives cover to a persons most valuable physical asset, their house. Often these policies also take into account contents and hence become home and contents insurance. The cover offered on these policies is varying between insurance companies but it can be generally assumed that two types of insurance are available, these being accidental damage and defined risk. ... The cover value is available in three main types these include total replacement, fixed sum insured and indemnity policies.
The total replacement insurance covers all costs when rebuilding the house after it is damaged. ... This policy is very simple, it means that a house can be insured at a certain value, which is agreed to by the owner and the insurance company. ...
At present in New Zealand all holders of a house and/or contents policy (such as the types mentioned above) are covered against earthquakes, volcanic eruptions, tsunamis, hydrothermal activity and a natural landslide. ... This cover is limited and many insurance companies will provide extra cover for those wishing to exceed the upper limit of $100,000.
All of the above insurance policies are all usually connected to a policy on contents, therefore effectively covering the individuals’ personal effects that were in the property at the time of loss.
Approximate Word count = 1658
Approximate Pages = 6.6
(250 words per page double spaced)
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