Types of Insurance
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Insurance products are organized into broad categories based on what risk they cover. As a pre-licensing student, you must understand the major lines of authority recognized by your state.
Major Lines of Insurance
Life Insurance
Life insurance provides a death benefit to designated beneficiaries upon the death of the insured. It is designed to replace lost income and cover final expenses.
Health Insurance
Health insurance covers medical expenses arising from illness, injury, or preventive care. It may be individual or group coverage, and includes HMO and PPO plan structures.
Property & Casualty
P&C insurance protects against loss or damage to property and liability arising from accidents or negligence. It is a separate line from Life & Health and requires a different license.
- Life Insurance — covers the economic loss caused by death of the insured
- Health Insurance — covers medical expenses from illness, injury, or preventive care
- Disability Income — replaces a portion of lost wages when the insured cannot work
- Property Insurance — covers loss or damage to physical assets
- Casualty / Liability — covers legal obligations arising from negligence or accidents
- Annuities — accumulate funds and provide an income stream, often in retirement
Your license will specify the lines of authority you are approved to sell. Life & Health is a separate line from Property & Casualty — each requires its own license examination and continuing education.
| Feature | Life Insurance | Health Insurance |
|---|---|---|
| Primary benefit | Death benefit paid to beneficiary | Reimburses medical costs incurred |
| Insured event | Death of the insured | Illness, injury, or medical need |
| Common forms | Term, whole, universal life | HMO, PPO, indemnity plans |
| Premium basis | Age, health, coverage amount | Age, plan tier, geographic location |
Life vs. Health Insurance at a Glance
- Insurance is divided into major lines: Life, Health, Property, Casualty, and Annuities
- Your license specifies which lines you are authorized to sell
- Life insurance replaces economic value lost at death; health insurance covers medical costs
- Annuities are the reverse of life insurance — they protect against outliving your money