We probably all have been advised to buy insurance more than once – for life, health, and even for buying a new car or starting a new business.
However, we often we shy away from buying insurance, thinking – why do I need to buy a life or health insurance being a young and healthy person? Or, why do I need insurance for my car when I have good driving skills. However, regardless of how healthy we are or how well we are doing financially or how good of a driver we are, we all need insurance. This is simply because insurance acts as a safety net that financially protects you and your family when chips are down.
What is insurance?
The concept of insurance is very simple to understand. A person pays a monthly or yearly fee to the insurance company to insure life, health, vehicle, property, etc for a certain period. In return, the insurer pays for the financial damages in case of any harm to the insured person or object. That is, the person transfers the risk of a financial loss they might experience due to life’s uncertainties to an insurance company for a small fee.
There are 3 types of insurances that are most essential. They are:
- Life Insurance
- Health Insurance
- Liability Insurance
WHY YOU SHOULD CONSIDER INSURANCE
As earlier stated, most people think insurance is an unnecessary expense. The reason is that we feel confident about our future and our ability to tackle unseen circumstances. However, there is a huge difference between our perceived ability and reality. For instance, a few years of savings can vanish in case of a medical emergency.
Here are three reasons why getting insurance is important:
- Insurance ensures family’s financial stability:
No matter how much a person has managed to save or what their monthly income is, an unexpected event can burn a huge hole in the pocket or can simply jeopardize the family’s financial future.
For example, in the case of death without adequate life insurance, the family might have to go through financial hardship. Though no amount of money can replace the loss of a loved one but having life insurance would save them from going through financial hardship. Meanwhile, in the case of inadequate health insurance, huge medical bills paid during any treatment can completely shake one’s finances.
- Insurance brings peace of mind:
The premium a person pay to the insurance company is the price that guarantees that the insurance company will cover the damage in case of an unforeseen event. And, that guarantee, that one’s risk is covered brings peace of mind.
- Insurance reduces stress during difficult times:
No matter how hard one try to make life better, an unforeseen event can completely turn things upside down, leaving a person physically, emotionally and financially strained. Having adequate insurance helps in the sense that at least one would not have to think about money during such a hard time, and can focus on recovery.
For example, suppose you or someone in your family needs immediate hospitalization, which costs a ton, having health insurance in this case saves you the worries and stress of arranging money. With insurance in place, any financial stress can be taken care of, and you can focus on the recovery.
Having insurance – life, health, and liability – is an essential part of financial planning. It can save one from financial hardship in case of any unforeseen circumstances. However, the decision to buy insurance should be determined by three factors – requirement, the benefits you get from the policy, and your ability to pay the premium.
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