There are many types of insurance for individuals, and choosing the right ones for you can be overwhelming. These policies are distinct, yet they often overlap.

It’s smart to review your personal insurance policies any time you have a significant life event. This ensures that you and your loved ones are cared for should you find yourself unable to work.

Read on for a brief explanation of the different types of individual insurance.

Life Insurance

This is the main way to protect your family and dependents from financial hardship if you die. It is an agreement between you and an insurer, where you pay the insurer premiums and in exchange, they pay your estate a certain sum upon your death. The paid sum is called a death benefit.

If you have named a beneficiary, the money goes to that person instead of to your estate. The sum received by your beneficiaries can be used for anything, from funeral costs to everyday bills to putting a child through college.

There are a few different types of life insurance, so you’ll still have to do some research to determine which type makes the most sense for you.

It works to your advantage to get a life insurance policy early. Your health and age will be evaluated to determine the coverage you’re eligible for and how much it will cost.

There are some limitations to life insurance. For example, suicide within two years of purchasing the insurance is not covered. Often, death by extreme sports is also not covered.

Income Protection

Also known as disability insurance, income protection is a long-term policy designed to protect your income if you become unable to work. It lasts until you are either able to return to work or you retire.

Income protection insurance typically covers 50%-65% of your regular income. It acts as a safety net so that you are able to pay your bills and mortgage when you can’t work. It would cover instances of illness or injury, either short or long-term. The payments are ongoing and regular.

This insurance can be claimed as many times as necessary as long as the policy lasts. There is usually a deferred waiting period of several weeks before payments begin. It is distinctly different from illness or injury insurance, which instead pay out a lump sum.

Illness insurance

This insurance covers a critical illness, such as cancer, stroke, or heart attack, but exact coverage may vary depending on your policy.

The benefit received is paid like that of life insurance, in that it is a lump sum and can be used in whatever way you see fit. Often this payment will go to something related to your care or income replacement, but it doesn’t have to.

Injury insurance

Injury or accident insurance covers you if you experience an accident that prevents you from working. What qualifies as an accident varies from policy to policy, so make sure to go over what’s included.

These policies typically exclude injuries that occur while the covered person is intoxicated or committing an illegal act.

Long-term care insurance

The costs for long-term care can be enormous. Long-term care insurance would reduce that should you need care either in your home or in a facility.

These policies provide ongoing cash payments, but read the details to find out exactly how your policy would work.

Health insurance

A health insurance policy varies widely based on your country of residence. Typically you pay a premium in exchange for coverage of a wide range of health care needs. How this is structured depends on where you call home.

Imagining adversity that may come your way is not anyone’s idea of fun, but it’s responsible to take steps to protect yourself in case these things happen. Obtaining a set of personal insurance policies ensures your loved ones would be okay. The peace of mind is well worth the cost of the associated premiums.