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Compare the Different Types of Policies and Choose the Best Option

Going through life without insurance is like walking the tight rope without a net to catch you in case you fall.

In today's unpredictable world, carrying insurance is practically a no-brainer. However, there are so many types of policies available - how do you know which ones you should purchase?

The best way to decide which types of policies you should purchase is to familiarize yourself with the basics of each type of product.

Health Insurance

You never know when you or a loved one is going to get sick or injured, which is why it is so important to carry health coverage.

There are essentially two types of health plans you can purchase: indemnity (or fee-for-services plans) and managed care.

Indemnity products typically offer policyholders a greater degree of flexibility and choice when it comes to selecting a health care provider. However, with this choice often comes higher out-of-pocket costs.

Managed care plans typically offer policyholders lower costs compared to indemnity options but consumers do need to work within a plan's network of health care providers. Common managed care options include HMO, PPO and POS plans.

Auto Insurance

This is another essential form of protection to carry. In fact, if you own a car or truck, you are required by law to be insured.

When shopping for a solution, you will be able to select from several coverage options for your policy.

The most common options include:

  • Liability, which covers costs associated with bodily injury or property damage resulting from an accident that is caused by the policyholder;
  • Collision, which looks after costs associated with damages to the consumer's vehicle resulting from a collision with another vehicle;
  • Comprehensive, which looks after costs associated with damages to the individual's vehicle resulting from an incident other than a vehicular collision; and
  • Uninsured/Underinsured Motorist, which covers costs related to an accident that is caused by another driver who has either no or limited protection that will not sufficiently look after all costs stemming from the accident.

Homeowners Considerations

If you own a home, then the smart move is to carry homeowners insurance. This protects a policyholder's home and personal possessions should disaster strike.

There are different levels of protection that you can purchase. You can purchase a basic option, which looks after only 10 perils, or you can purchase an augmented product that will cover 16 perils. You also can purchase policies that will look after any and all perils except those specifically excluded in the policy.

Most agreements will not include certain perils, such as damage caused by flooding or earthquake. Individuals will need to purchase separate policies in order to take care of these types of excluded perils.

There also is a certain type of product that is available to renters. Even though renters do not own their residences, they can purchase protection in order to protect their valuables within the residence.