Overview of the Insurance Industry
In the US, it's estimated that more than 141 million people have some form of health insurance. Covering everything from doctors fees to prescription medication. The individual mandate in the Affordable Care Act mandates that all US residents are required to have health coverage of some kind, and those who do not comply will be subject to a penalty when filing their taxes. Nevertheless, there are still many uninsured people in the United States: while the rates differ depending on your age and income bracket, approximately 15% of all Americans don't have an active health plan.
The US healthcare system is complicated for many reasons, one being the fact that it's not run by the government, but rather the insurance industry. If you are an expert in insurance law, or just want to get a better understanding of this sector before pursuing a career in it, then you might benefit from our overview of the insurance industry . It explains the basics of what an insurer does, how these companies are structured and what makes them different to each other. It also goes into detail about the different types of insurances available today: car insurance , health insurance , life assurance , home owner's insurance and more.
Who are the Insurers?
Insurance companies are private companies who operate in many countries around the world, helping to provide various types of security and financial services for their customers. These days, there are three main types of insurance available on offer: general insurance, health and life assurance. These three sub-sectors of the industry work together to form what's called the "insurance industry", which is surprisingly more complex than it sounds!
In simple terms, an insurer provides insurance cover against a risk or against a loss, which can be through: theft (property), accident (personal injury) or permanent disability (health). The consumer usually chooses one policy that has a fixed cost for all cases that fit within its terms. This means they're free to choose the best policy for their needs and price. However, when it comes to general insurance, there are limitations as to which kinds of coverage can be given.
Types of Insurance
General Insurance
General insurance is offered through a variety of companies that can provide different kinds of services. In Canada , the leading carriers are Great-West Life and Sun Life as well as Manulife Financial . They provide life insurance , business insurance , health insurance , home and automobile insurances as well as other forms of protection. Generally speaking, general insurance companies are larger than their smaller counterparts because they have more resources to draw upon in order to provide greater security against risk or loss for their clients.
Health and Life Assurance
While healthinsurance is a general term that encompasses all of the other forms of insurance, as far as the insurance industry is concerned, it's made up of two separate sectors: healthinsurance and lifeassurance . As far as our overview is concerned, health insurance is further divided into medical and non-medical insurance. This distinction exists because medical plans are generally more expensive than their non-medical counterparts because they cover a greater range of topics. For example, you may pay thousands to insure your pet but receive only $250 when you have pet accident coverage . The excess can be waived by paying larger premiums.
Similarly, there are different kinds of life assurance . You may have permanent insurance that protects your loved ones after your death, as well as auto-insurance to cover damages to a vehicle or health insurance to cover costs for your treatment. While some of these are mandatory (car insurance), the rest are available on an optional basis. For example, most people would need life assurance more than a pet insurance plan.
In order to provide this additional protection, health and life assurance companies rely on two main types of capital: invested capital and borrowed capital . These both have their uses depending on the type of policy they're offering you. For example, the invested capital from your premium payments is put to good use in providing you with health insurance, whereas the loaned capital is used to give you the mortgage that allows you to buy a house.
In Canada and America, the leading health insurance providers are Blue Cross , Sun Life Financial and Manulife Financial . The biggest life assurance companies operating on a global scale are Sun Life Financial as well as ING Group .
Credit Insurance
On top of all of these different kinds of insurance policies, there are also credit insurances which cover borrowers against loss or debt that they're unable to pay off. For example, an individual might purchase an expensive item on credit with the intent of repaying it over time with monthly payments. However, they have trouble making the payments and end up falling into debt. This is where credit insurance comes in, which can help them to regain some of their equity in the item.
Often a credit insurance is part of a life insurance package, although it would be more accurate to describe it as a loan-based security service. The two main kinds of credit insurances are personal loan coverage and real property coverage . In both cases, the policyholder gets the use of the item or property until they're able to repay it, and at that point, any remaining amount will be returned in full. By making timely payments, the insurance premiums will then cover the balance of the loan.
Through credit insurance, individuals can be protected in case of the loss of employment or other situation where they can't pay off debts or bills. For example, if you're a homeowner who's facing foreclosure on your property, credit insurance pays off your loan for you and provides you with a new mortgage that helps you continue to make payments. It also provides payment assistance for any medical expenses as well as other bills which might be a struggle for you to afford.
In order to provide this kind of protection, credit insurances work in conjunction with a bank or lending institution .
Conclusion
Even though there are many more things that go into the insurance industry than we've been able to explore here, let's review some key points for our quick overview of the industry. In order for you to ensure your personal financial security, you should consider some kind of general insurance in case of a loss. You can also consider credit insurance depending on your needs.