We've all probably bought some kind of insurance. Whether it's for car insurance, home insurance, health insurance, or travel insurance, to name a few, we've all paid insurance companies a lot of money in exchange for the peace of mind that comes with knowing you're covered in case something bad happens. But how many of us really understand all of the details of the deal we are making?
Some of the most complicated legal provisions and contract terms you're likely to find anywhere are in the paperwork that comes with a new insurance policy. Insurance companies spend a lot of money on lawyers and have teams of experts who are always updating and changing the terms of their contracts to make sure they are ready for anything. You, on the other hand, probably don't have much time to learn about the details of your insurance contract. Instead, you'll probably just skim over the main points that the insurance company calls out.
But there are a couple of things you can do to make sure you understand the contract you are signing at least a little bit. The goal and methods of all insurance contracts are pretty much the same. They take the chance that something bad will happen and pay for it if it does. This could be anything, but the most common ones are car accidents, damage to the house, medical care, and other similar things. Life insurance is a little bit different in that it guarantees to pay out when you die, which is still a sure thing that will happen, but it isn't as bad as it sounds. But no one knows when they will die, so there is still a very real chance that they will die when their children or spouse are completely dependent on them.
There must also be a cost to the event in terms of money. For the insurer to be able to figure out the correct price of the premium, they need to have a good idea of how much the loss will cost. So, you can get your money back for medical bills and lost wages through insurance, but you can't get money back for the pain and suffering or sadness of losing a loved one.
So, the most important thing to look for in an insurance contract is what is covered. In what situations will the policy pay out, and what won't be covered? Then there are the things the policy doesn't cover and the rules you have to follow to keep it valid. This could mean making sure your door is locked or getting your health checked. Make sure you know what the contract says you have to do and do it.
