Types of Insurance You May Never Have Heard Of
Tuesday, August 4, 2015
Insurance exists to provide comfort and financial coverage in times of need. The more common types of insurance include life, auto, home and travel. But in actual fact, there is an insurance policy that provides protection and coverage for virtually anything. Here are six that you may not be aware of.
1. Long-Term Care Insurance
Canadians are living longer. As we age, it becomes more and more difficult to care for ourselves. Long-term care (LTC) insurance provides financial coverage for people who are unable to perform the basic activities of daily living such as bathing, walking, eating, getting in and out of a bed, and toileting.
There are two types of long-term care insurance:
- A policy that will reimburse policyholders for expenses such as private nursing
- A policy that provides a monthly income to be used as required to pay for in-home care services, or full-time care in a facility, or to pay a family member to provide care in his or her home
2. GAP Insurance
When a vehicle is stolen or completely written off in an accident, the auto insurance provider will pay out only the amount of the vehicle’s current value. Guaranteed Asset Protection or GAP insurance covers the difference between the current value of the car and the amount that you paid when you bought it.
GAP insurance may make sense if you:
- Made a low downpayment, leaving a considerable amount owing on the vehicle
- Bought a car that is known to lose value quickly
- Are paying your debt down slowly, which means your vehicle will depreciate faster than your debt is reduced
- Are currently paying a high rate of interest
There are two main types of GAP insurance:
Return to Invoice Insurance - This will top up the payment for your car insurance so that you can get back exactly what you paid for the car. The great thing about this type of GAP insurance is that it is applicable on both new and used cars.
Finance GAP Insurance – If you borrowed money for your new car, you may owe more than the insurance company will pay. The finance GAP insurance policy covers your debt with the finance company.
3. Prize Indemnity Insurance
This insurance is mainly for businesses and large corporations that are holding promotions or contests that include significant and/or expensive prizes.
The companies will purchase Prize Indemnity Insurance in the event that the prize or prizes are won. Then the insurance company covers the cost incurred on the prizes.
Common uses for Prize Indemnity Insurance would be a prize for a hole-in-one at a golf tournament or a sponsored motor racing team.
4. Blanket Insurance
A blanket policy is an insurance policy that covers different types of property, or property at different locations. Many people have blanket insurance policies without even being aware of it. Any policy that includes several properties or possessions can be called a blanket policy.
Here are some scenarios for blanket insurance policies:
- You have a house and a condo on the same piece of land. You want to insure them together, but you want the house to be insured with its possessions, and only the building and publically shared spaces of the condo to be covered. A blanket policy can cover them both.
- You own houses at different locations, or business establishments across your city, and you may want to insure them together.
- Your homeowners’ insurance policy covers both your dwelling and your possessions and even items that you carry on your person or in your vehicle.
Many people take out an insurance policy that blankets their homes, home contents and vehicles. They can specify the amount for which each should be covered, but the vehicle is covered against vehicle-related risks like theft and breakdown, while the house is covered against building-related risks like fire and damage.
Blanket Insurance is sometimes confused with Umbrella Policies, but they are not the same. An umbrella policy provides an additional “umbrella” of coverage over a person’s existing types of insurance, such as homeowners or auto insurance. When the maximum coverage of these policies is exceeded, the umbrella policy kicks in providing the insured with extra protection.
5. Personal Loan Insurance
Personal loans are convenient and relatively easy to get if you need to make a significant purchase like a car. But sometimes life takes a turn, and it can become difficult to make your loan payments if you lose your job or become too ill or incapacitated to work. That’s what Personal Loan Insurance is for.
Personal Loan Insurance is payment protection in case you become temporarily incapable of making loan payments, for any reason. The purpose of personal loan insurance is to provide you with financial aid when you need it the most, up to a predetermined amount.
While not actually a type of insurance policy, a rider enables you to customize your insurance policy to better fit your needs. Also called an endorsement, a rider is an addition or amendment to an insurance policy that provides additional coverage at an extra cost. Conversely, a rider might remove or limit certain coverages. Read more about insurance riders here.
To make sure your insurance coverage is exactly what you need, talk to an insurance agent about a custom fit policy so you can rest easy knowing that you’re protected in any event.
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