Finance Quick Answers
What kinds of insurance providers are there?
There are three basic types of insurance: private insurance, social insurance, and public guarantee insurance.
Private insurance includes:
- Capital stock insurance companies (owned by stockholders)
- Mutual insurance companies (owned by the insured policyholders)
- Reciprocals (an unincorporated association of individuals or entities that exchange contracts of insurance through an attorney-in-fact may provide a tax advantage to groups of non-profit entities)
- Lloyd's associations (organization of individuals who underwrite insurance cooperatively, where individuals are personally liable for losses of other members)
- Health expense associations (e.g. Blue Cross/Blue Shield)
Social insurance includes:
- Federal Social Security (OASDHI - Old Age, Survivors, Disability and Health Insurance)
- Workers Compensation (provides monthly benefits to a worker who cannot work because of an injury or illness sustained while on the job - operates through the state, with premiums paid by the employer)
- Flood Insurance (a Federal program for property owners who live in areas that are likely to flood - such damage is not covered in standard homeowners insurance policies)
Public guarantee insurance includes:
- FDIC (Federal Deposit Insurance Corporation, which insures against depositor losses in the event of bank failure)
- NCUA (National Credit Union Administration, which insures against depositor losses in the event of credit union failure)
- SIPC (Securities Investors Protection Corporation, which provides that customers of a failed brokerage firm receive all non-negotiable securities already registered in their names or in the process of being registered)
Brenda Procter, M.S., Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri-Columbia
If you'd like to learn more about this and other personal finance topics, the University of Missouri offers 'Personal & Family Finance,' a correspondence course, through the Center for Distance and Independent Study (800-609-3727). Information about this course is available at http://cdis.missouri.edu/CourseInfo/DetailCourseInfo.asp?1985.
Last update: Sunday, July 20, 2008