There are many different types of insurance policy available to suit the need of the consumer. An insurance policy is the legally binding contract establishing that the insurer (the insurance company) will provide the insured (the policyholder) with compensation should certain events outlined within the document occur. A premium is paid by the policyholder to the insurance company in order to secure insurance coverage. This cost is paid either as installments or in a single lump sum.

Various types of insurance policy can be created for almost any conceivable threat but most are not required by the average person. Among those that are a necessity for most people is health insurance. Health insurance helps the insured pay for medical treatments and related costs, that otherwise would prove to be outside of their budget. Most employers offer health insurance to their employees and qualifying family members, these are the most reasonably priced. Health insurance might seem unnecessary to a healthy individual however illness and accidents can occur to anyone and in most cases those medical expenses can quickly add up.

For married couples or parents, life insurance can be a very valuable asset.  Life in itself is precious, but from a financial standpoint it is what grants people the ability to earn money and provide for themselves and their families. When a person dies unexpectedly, it creates a very large gap in income that quickly leads to economic strife. Life insurance provides compensation that can help pay for funeral expenses, burial costs, and outstanding debts that most families incur such as credit cards, car financing, and mortgages.

Homeowners insurance is mandatory for those who have a mortgage on their home. The bank requires the property, which is their asset until the borrowed money is repaid, be insured against damages usually caused by a catastrophic event such as fire, storm, or flood. The premium for this type of insurance policy is usually calculated in to the monthly mortgage payment, although it can also be paid separately by the homeowner directly to the insurance company as long as the proof is provided to the bank itself.

Auto insurance is another type of policy that is often required by states in order to be a registered driver. It covers the car itself in case it is damaged during an automobile accident it can be either replaced or repaired, which ever of the two is more cost effective. Most also cover the injuries or death of another person in an accident the insured has been proven to be liable for.
Disability insurance provides financial assistance to those who have been disabled, either for short periods or the long term, and find themselves unable to work due to their injuries.