Insurance Needs Approach - Health and Property Insurance

Health insurance refers to the broad field of plans that provide protection against the high costs caused by illness, accidents, injury, and disability. Within the broad field of health insurance, there are three distinct categories of health coverage: medical expense insurance, disability income insurance, and accidental death and dismemberment insurance.

Renewability provisions- Health policies may contain any one of the wide varieties of renewability provisions, which define the rights of the insurer to cancel the policy at different points during the life of the policy. The five principal classifications are: optionally renewable, cancellable, conditionally renewable, guaranteed renewable, and non-cancellable. Simply put, the more beneficial the renawability provision to the insured, the more expensive the coverage.

Premium factors- Health premiums can be paid by several different payment modes, including annual, semiannual, quarterly, and monthly. The factors that enter into calculation for the premium include, interest, expense, types of benefits and morbidity. Morbidity is the expected incidence of sickness in a given age group during a given time frame.

Reserves- Reserves are set aside by an insurance company for the payment of future claims. Part of each premium is designated for reserves and show up on a company's balance sheet as a liability.

Participating vs. Non-participating- Health insurance may be written on a participating or non-participating basis. Most individual health policies are issued on a non-participating basis, while group health policies are generally participating and provide dividends.

Property insurance provides protection against loss of property. This includes numerous forms of insurance, for example- fire insurance, flood insurance, auto insurance, or homeowners insurance. This type of insurance covers two major apsects of property - open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage causing events as fire, lightning, explosion and theft.

Homeowner's insurance:
Most of today's homeowner's have some type of coverage on their home to insure against the risk of loss. Not only because the homeowner has concerns, but because most home loan lenders will require it as a condition of the loan to insure them against loss in the incident of a catastrophic event.

Some of the more common coverages found in a typical policy are listed below:

Section I Coverage Limit of Liability
A. Dwelling*
B. Other Structures
C. Personal Property
D. Loss of Use

$50,000 (10% of A)
$250,000 (50% of A)
$100,000 (20% of A)
Section II Coverage Limit of Liability
E. Personal
F. Medical Payments
$300,000 each occurrence
$5,000 each person, $15,000 each occurrence
*Note: The land is specifically excluded from coverage.

Depending on where the property is located, other risks must be addressed such as hurricane protection in Florida, flooding in Louisiana, and earthquakes in California, to name a few. Personal Auto Insurance Policies
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