The Basics of Insurance
If you live in the United States, there are a few things you need to know about insurance.
What is insurance?
A quick definition from Investopedia:
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.
Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.
Julia Kagan, Investopedia
To learn more about insurance in general, check out this handout from Building Blocks.
For reading exercises on this topic, see our page: What is insurance?
What types of insurance are there?
There are many kinds of insurance. To simplify, we will focus on the four major types in the U.S.
Health Insurance
Life Insurance
Auto Insurance
Home (Owner’s) Insurance
Why do we need insurance?
Check out this article from The Cooperators.