Types of insurance

This article provides an overview of the different types of insurance available in the market. The FSA is the regulatory authority and ABI, Association of British Insurers' (ABI) Information represents the interests of UK Insurance industry and maintains information for the customers and the various insurance firms in the UK.
Insurance can be broadly classified into 2 categories:
• Pure Insurance
• General Insurance

FSA regulates the policies and implementation of sales of pure protection and general insurance.

What are pure protection and general insurance?

As the name suggest, pure insurance is the type which is solely taken for a purpose of getting compensated in case of any unwanted incident occurring. Pure protection insurance includes:
• term assurance (like life insurance for security of life);
• critical illness insurance (like refund in case of hospitalization);
• income protection insurance (like loosing a job or business); and
• payment protection insurance – includes elements of pure protection and general insurance (like preventing situations when one fails to make a payment towards a loan taken).

General insurance includes:
• motor insurance (like your car being stolen or meeting an accident);
• household insurance (like house being burgled or losses due to fire);
• some travel insurance (for accidents/losses while traveling overseas);
• health cover; and
• pet insurance.
FSA also regulates the sale of payment protection insurance, which often includes elements of both general insurance and pure protection insurance.

What is not covered by FSA rules?

Along with knowing what is covered by the regulatory authorities and its rules, it is also important to know what is not covered by it. The selling rules of FSA don't cover:
• travel insurance sold in connection with travel arrangements (eg a holiday or a flight);
• the sale of extended warranties on non-motor goods (such as on electrical goods);
• where the person selling the insurance is also arranging the travel or providing the goods.
However, the good thing is that even where the FSA rules don't cover the sale of a policy, they do cover the insurance company providing the policy, providing they are based in the UK and regulated by FSA – if so you will still receive a summary of the policy.

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