Different Types of Insurance and their Benefits: (A complete Guide)

That insurance is a way to protect people and businesses from unexpected financial loss is more than obvious. Now, there are many different types of insurance, each designed to cover a specific risk, so we will look at the most common types of insurance below.

What is insurance?

Insurance is a valuable tool to protect people from the effects of uncertain and dangerous situations. It implies transferring the responsibility to an insurance company that will pay or repair the damages caused by certain unforeseen events.type of insurance

For this, it is required to pay a fee (insurance premium) that gives the right to receive financial compensation or service in the event of the circumstances described in the contract.

The amount to be paid for the premium is based on the level of risk and the probability of an event occurring. When large sums of money are insured, reinsurance companies are used, which cover all or part of the risk by sharing a portion with the insurance company.

There are some insurances that are required by law, such as auto insurance, liability insurance, dangerous dog insurance, and homeowners insurance without a mortgage.

What is an insurance policy?

The insurance policy is the document that establishes the terms and conditions of the insurance contract between the insured and the insurer. This policy contains all the rights and obligations of both parties involved. The key aspects included in the insurance policy are described below:

  • Personal information of the insured person or company and the insurance company.
  • Specific details of the insurance contracted, including any important information to take into account.
  • Amount and frequency of payment of the premium.
  • Duration and effective date of the insurance.
  • Insured amount.
  • Additional benefits and modifications, also known as endorsements.
  • Names of the beneficiaries, who would receive compensation in the event of an insured event.

What risks can be insured?

There is a wide range of options in the insurance market to meet the needs of consumers. It is important to note that not all risks are eligible to be insured. Before deciding on insurance, it is crucial to know what risks are insurable. These risks include those that:

  • They cannot be predicted or will occur.
  • They are probable and have occurred previously.
  • They are out of human control.
  • They have a significant economic impact.
  • They are legal and do not violate the rights of third parties.

Who is involved in an insurance contract?

In the world of insurance, there are four main parts:

Insurance carrier

It is a company that offers insurance services and is obliged to compensate the insured in the event that the event insured in the contract occurs.


It is the person who owns the insurance contract and is exposed to risk.


It is the person who signs the insurance policy and is responsible for paying the premium, which is calculated based on the probability of a claim occurring and the client’s insurance history.


It is the person who is indemnified according to the conditions established in the insurance contract in case the event occurs.

Deadlines to take into account in the insurance contract

The following deadlines are important in each insurance:

Acceptance period

It refers to the period between when the insurance company offers a policy and when the person who wishes to hire it accepts the offer. Usually, this period is fifteen days.

coverage gap

It is the time that elapses between the moment the policy is signed and the start of the insurance coverage. During this period, the insured does not have protection.

Grace period

It is 30 days after paying the premium or periodic policy if the insured has not paid it. During this time, the insured will be covered.

Most common types of insurance

Companies in the sector offer many kinds of insurance that cover all aspects of a person’s life, businesses, and even pets.

These products are a great tool for planning and forecasting the future, but keep in mind that their cost can vary greatly depending on the type of coverage:

1: Personal Insurance

These are insurances that cover all the risks that may affect a person in their physical integrity, health, or existence:

1.1: Life Insurance

They serve so that the beneficiaries can have economic security if the insured person dies or is affected by absolute or permanent insurance


  • It can be hired individually or collectively.
  • Your hiring is voluntary.
  • It has a defined term, temporary contracts are for a defined period and whole-life contracts are until the death of the insured.
  • Establishes a maximum age for the insured to join the policy.
  • Establishes a maximum age of the insured at which coverage will be provided.
  • A statement of health is generally required before joining the policy.
  • The insured must take into account if there are deficiencies stipulated in the policy, their characteristics, and, if so if they meet their needs.
  • There are different types of life insurance: temporary, whole life, flexible life, savings, tax relief, etc.

1.2: Personal Accident Insurance

They cover care services and benefits, so the insured can be compensated if they suffer an injury or disability due to an accident (also in the event of death).

accidental insurance


  • It can be hired individually or collectively.
  • Your hiring is voluntary.
  • You can either pay a one-time compensation or reimburse the costs incurred for the treatment of injuries caused by an accident.
  • It has a defined validity.
  • A statement of health is generally required before joining the policy.
  • The insured must take into account if there are deficiencies stipulated in the policy, their characteristics and, if so, if they meet their needs.
  • It operates after the SOAP insurance coverage if the accident was caused by a traffic accident.
  • There are different types of accident insurance: accidental death, accidental dismemberment, accidental disability, reimbursement of accidental medical expenses, etc.

1.3: Health Insurance

They offer health coverage if needed, as well as a capital benefit or reimbursement of health expenses.

health insurance

1.4: Dependency Insurance

They cover clients who have been diagnosed with physical or mental limitations and who therefore need a person to assist them.

2: Property Insurance

They offer coverage of the risks of the patrimony of the person and of the companies:

2.1: Car Insurance

They cover the risks that can be taken when driving and are required by law to drive. Likewise, coverage can be added against theft, fire, and/or damage to the vehicle.

2.2: Motorcycle Insurance

They protect the owner of a motorcycle against eventual property damage, personal injury, and civil liability derived from an accident.

2.3: Engineering Inurance

They are specialized in property damage resulting from accidents caused by natural phenomena, human errors, the action of things, natural wear and tear, etc.

2.4: Multi Risk Inurance

They cover a wide variety of risks by contracting a single insurance policy.

2.5: Credit Insurance

They offer coverage for debtor insolvency losses.

2.6: Surety Insurance

They guarantee compliance with a contracted obligation, providing an economic guarantee in case of non-compliance.

2.7: Saving Insurance

They combine protection against risks with the accumulation of savings, allowing you to achieve a long-term return on your savings.

2.8: Theft Insurance

They are hired to deal with theft of insured property, with violence or intimidation.

2.9: Freight Transport Insurance

They cover the material damages that the goods or transport may suffer.

2.10: Fire Insurance

They guarantee coverage for damage caused if the insured object catches fire.

2.11: Civil Liability Insurance

They are contracted to indemnify a third party if the insured is civilly responsible for the damages or losses caused.


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