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Insurance is protection. It is important to protect what matters to you and your family against financial risks. The majority of people should protect three main areas: assets, life and health. Within the three areas, there are some types of insurance that are absolutely necessary and others than may be superfluous in many circumstances. Insurance is meant to cover severe risks that could cripple you financially. This article will examine the aspects that need to be insured.

i) Life insurance
Life insurance is not absolutely necessary for everyone. However, it may benefit the majority. Life insurance is designed to protect your income for your financial dependents. It may also be necessary as a form of mortgage protection or for business purposes. The type of life insurance you acquire should depend specifically on the purpose that precipitates the need for it. Temporary insurance is associated with needs that would exist for less than 20 years generally. These include business purposes and short-term immediate cash needs.

Permanent insurance is useful for estate planning and final expenses. Term insurance is not unequivocally better than permanent insurance or vice versa. Life insurance plans are too diverse to make this simple-minded claim. Some advisors are not even fully-educated about the benefits that specific plans of any type can afford. Every plan has its context, although I concede that some plan structures are abusive.

ii) Homeowners insurance
Your house is a key investment. For most people, it represents the largest asset they own. The potential severity of loss or damage to this asset alone makes it an insurable risk. It is important that you do not under-insure your home as well. Trying to save on premiums without considering proper indemnity is pseudo-economics. Your home should be insured up to its cost of replacement.

iii) Motor insurance
This is compulsory. However, few people realise why it is mandatory in the first instance. Motor insurance is designed to protect both the general public and vehicle owners from third-party damage. Creditors may be interested in whether your vehicle is comprehensively insured. However, the law requires that you have third-party coverage so that you do not put others at financial risk due to negligence. The vehicle owner benefits by transferring the financial liability to an insurer.

iv) Health insurance
This is arguably the most significant form of insurance. It is even recommended that people have individual plans

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