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How do ETFs work?
Your guide to how ETFs work and whether this type of investment is right for you.
Read more…The big names in this industry are well-established and have a history of healthy dividends. But not all insurance categories are recession-proof and all must answer to government regulation.
Insurance stocks are stocks from insurance companies. A variety of subcategories exist in this industry including:
Many insurance stocks offer exposure to multiple subcategories by offering a variety of different insurance policies, like Allstate. Other companies specialize in only one type of insurance and offer a more targeted investment opportunity, like Trupanion — a pet insurance company.
Since the products they offer can be considered a type of staple, insurance companies tend to perform well — both in times of economic strength and in times of economic hardship. Plus, well-established insurance stocks have a history of strong and steady dividends — an added bonus for investors seeking a steady return.
Many insurance stocks are considered recession-resistant. That’s because even in periods of economic downturn, people need to maintain their insurance coverage. The staying power of the industry can’t be understated; insurance has been around for hundreds of years and provides a service we’ll continue to need for the foreseeable future.
Regardless of geographic location or socioeconomic status, people rely on insurance policies to protect them from risk. Ongoing demand helps bolster this industry’s ability to weather periods of recession.
Insurance stocks are far from invulnerable, and the same economic conditions that safeguard some categories of insurance may put others at significant risk.
Take health insurance companies as an example. When unemployment rates rise, fewer people are employed and able to pay into employer-sponsored health insurance plans. This impacts the provider’s bottom line and has the potential to detract from the value of its stock.
Insurance providers are also subject to government regulation, which means that new legislation has the potential to impact the market in a powerful way.
There are plenty of pure-play insurance stocks available, but with numerous types of insurance on the market, you’ll need to learn more about the individual offerings of each company before you invest.
A variety of options exist for investors interested in insurance ETFs, from property insurance ETFs like the Invesco KBW Property & Casualty Insurance ETF to broader insurance ETFs that capture health, life and property insurance companies, like the SPDR S&P Insurance ETF.
Before you can invest in insurance stocks, you need a brokerage account. Explore your options by features and fees to find the account that best meets your needs. Learn more in our guide to opening a stock trading account.
Many people rely on insurance coverage to protect themselves, loved ones and property, so the insurance sector is well-positioned to weather the highs and lows of a shifting economy. But there are unique challenges associated with different types of insurance. Before investing, make sure you carefully research companies and compare stock trading platforms.
Your guide to how ETFs work and whether this type of investment is right for you.
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