The concept of insurance has existed for well over 100 years, and is quite possibly one of the most advantageous concepts that exists in society today. Several of the largest corporations in the world are insurance companies, and many of them have tens of billions of dollars in reserve accounts. Different types of insurance policies are available to protect nearly every risk imaginable, and new policies are created every year.

Insurance works in a very simple manner. Insurance companies pool together a small sum of money from multiple people who want to protect against the same risk, thereby providing the funds necessary to compensate for a loss by any one of the policy holders. Many forms of insurance have come to be required by law in certain states and in certain situations, while other forms of insurance are at the discretion of the individual. It is the latter that will be the focus of this discussion because it is extremely beneficial to acknowledge certain risks and the policies that can protect against such risks.

The most common form of insurance in this category is life insurance. The primary purpose of life insurance is to provide a sum of money to one's survivors to compensate for the income lost upon the death of that family member. For those situations where the loss of such income would put the survivors in a severe financial predicament, life insurance would be used to ensure that the bills continue to be paid, the future education of the children will be funded, and funeral expenses will be covered. One of the worst situations for a family to experience is the loss of a loved one, not to mention the mental and emotional trauma of realizing an inability to continue living the lifestyle to which they have become accustomed.

Another important form of insurance is disability income insurance. The purpose of disability insurance is to provide a regular and consistent replacement of income in the event of an injury which prevents someone from gainful employment for a period of time. One of the main reasons for home foreclosures in this country is a medical issue or injury that prevents a person from continuing to work. Since only a small handful of states have disability insurance programs, and qualifying for federal government disability benefits can be difficult and time-consuming, the ability for an individual to purchase their own private plan is very attractive. Disability insurance policies can be customized to begin paying benefits as early as one month after the incident occurs, with the option of having those benefits continue to be paid for several years, and in some cases forever.

Long Term Care insurance is another extremely important insurance benefit that too few Americans have. As people continue to live longer every year, the likelihood that a person will require some form of professional care in their later years increases dramatically. However, as the need for such care increases, the number of organizations providing this care has not grown at the same pace, thereby creating a shortage of providers. This, in turn, has driven the cost of quality care higher than the average person can afford. Many people unrealistically believe that the federal government will provide the funds necessary for Long Term Care, yet fail to realize the significant consequences of allowing that to happen. An individual Long Term Care insurance policy can be customized to provide a daily or monthly benefit to the policyholder in the event that professional care becomes necessary in either a nursing home, assisted living facility, or even in one's own home.

The preceding three types of insurance are by no means the only available insurance policy types, but they are perhaps the most essential to proper asset and income protection. Countless companies exist who offer specific products of each of these three types, and each company's product will have its own unique features. The company selected by the individual to provide each of these insurance types is secondary, with the most important aspect of these insurance policies being the acknowledgement that they are necessary and appropriate.

Any time a situation exists where others would suffer a financial loss, or where money would be required to replace, repair, or otherwise restore, insurance should seriously be considered and purchased. The assistance of a qualified professional in the insurance industry is also essential to ensure that there is complete comprehension of the policy features, and proper selection of insurance carriers.