What is insurance in simple words?

Purchasing insurance can be daunting for some of us, but it shouldn’t be. It shouldn’t be complicated, headache-inducing, or a burden. When insurance agents and customers work together everyone is on the same goal– to protect you. 

In the simplest terms, insurance consists of you the customer paying a company a monthly fee to protect you from the risk of financial loss. You can purchase insurance policies for a variety of risks, but the most common are auto, home, life, health, and business. Insurance can ease the uncertainties of daily life by reducing the risk of financial loss due to an accident.

Let’s break down some of the 6 most common terminology in insurance:

Insured: This is you, your family, your business. It is the person(s) listed in the insurance policy covered from a potential accident. 

Insurer: The company that provides you the policy. 

Policy: A written and signed contract between insured and insurer to financially protect against accident and loss.

Premium: Your cost for having the insurance policy, this is often monthly but depending on policy could be annual or semi-annual.

Deductible: The amount the insured pays in the event of an accident before your insurance kicks in. 

Claim: A request for financial compensation due to loss covered by your insurance policy.

At the end of the day, by acquiring an insurance policy, you won’t have to pay large expenses when the unexpected arises, like auto accidents, health complications, natural disasters, and so on. 

There are many types of insurance and many insurers out there, finding an agent you trust is key. Find someone who can answer your questions, and provide you with sound advice for the policies that are best for you and your unique needs.