Insurance Contracts

In class we have been discussing insurance policies. I decided to research insurance contracts and discovered Investopedia.com. The webpage has articles about how insurance was developed. It was developed to spreak risk among many people that could handle the risk. There is also a link to a page about personalizing your risk tolerance, which is what we determined for the AspenTech case.

When the class was asked how we choose an insurance policy, we said based on which policy is the cheapest. This seems like a logical way to choose since you try to minimize your bills, but the insurance company could not be very reliable, or they could even be tricking you in some other way. I looked on Investopedia.com to learn more about insurance, how to choose it, and what you are getting from a policy. I found that Under-Insurance and Excess are things to look out for when choosing an insurance policy. Under-Insurance is when you have a house which is valued at $100,000 but the insurance only covers $80,000. If there is a partial loss to your house, the insurance company will pay only a portion of the $80,000. An example of excess is when you are insured at a value of $5000. Then your car has damage of $7000. The insurance company will pay you the full $7000 which is great, but if there is partial damage less than $5000, the insurance company will pay nothing. These are just a few of the important terms you should learn about when deciding on an insurance policy. A lot of times, people just get a cheap policy and then put it in a pile with all their other bills and paperwork and know nothing about it. But, I think we should learn more about our policies. As a soon to be senior in college, I will be on my own soon with my own career. I would like to know how to choose my policies to get the most coverage and benefits for a bargain. I think everyone should learn about the risks associated with choosing companies without learning about them first.

Here is the link to the Investopedia webpage to learn more about insurance.
http://www.investopedia.com/articles/pf/06/insurancecontracts.asp

I also found this cool website Insurance 101 with information about every type of insurance policy you are able to purchase and which ones you could do without.
http://www.investopedia.com/features/insurance-101.aspx

I found an article, Five Insurance Policies Everyone Should Have
by Lisa Smith, which states the 5 insurance policies everyone should have are long-term disability, life insurance, health, home, and auto insurance. I agree with this list because these are the basic needs and assets which most people own. The list provides basic coverage because you never know what will happen to you. People think that "This will never happen to me," but sometimes accidents happen, and you need insurance. The insurance will ensure that you can cover your costs and will not have to go bankrupt. Insurance is there to ensure you remain in the same financial situation you were in before the accident.