The Need for Insurance Mystery Revealed
If you're thinking why you need insurance and why you can't just save money and pay in cash when an incident happens, you aren't alone. Within those two indicators are the answers to your questioning.
When you pay your insurance premiums you are literally adding your money to a pool of premiums from others. This mitigates the risk for when someone in the pool is in need of coverage. This means that when you pay your premiums for insurance that you are both; not paying as much due to pooling of premiums and protecting yourself from future catastrophic activity that is bound to happen.
Home, automobile, and life are just three of the various kinds of insurance policies that are available for consumers. Insurance, of all kinds, is used to help protect consumers when certain things happen. For the most part, this protection comes in the form of money. It can also provide protection from liability, damages, and financial loss, but in the end, it usually comes down to money.
These include risk of losses of life, health, assets, property, etc. While it is not always possible to prevent unwanted events from occurring, financial world has developed products that protect individuals and businesses against such losses by compensating them with financial resources.
Keep in mind that you can insure virtually anything. There is virtually nothing that you cannot insure, but protecting yourself and your assets against loss is one of the most important reasons for having insurance.
To take insurance to a legacy level, you will find that insurance allows for folks to prosper after you are gone. This also conspires to counteract anything that could happen to you in the near future. If you are hit by a city bus while walking downtown or, you fall down the stairs at work. Regardless, you don't leave your loved ones guessing how they will pay for immediately due expenses. If your loved ones depend on your financial support for their livelihood, then life insurance is a must, because it replaces your income when you die. This is especially important for parents of young children or adults who would find it difficult to sustain their standard of living if they no longer had access to the income provide by their partner. You will also need to provide enough money to cover the costs of hiring someone to cover the day-to-day household tasks, like cleaning, laundry, cooking, childcare and everything else a growing family needs.
Case Study: Tony and Karen
The following scenario is illustrative only to demonstrate the importance of insurance and is not based on an actual event. Tony (34) and Karen (33) recently upgraded to a new home to allow their twin boys Nicholas and Rocky (aged 4) more room to play. This also meant taking on a bigger mortgage on one income, as Karen is a homemaker. To protect the family, Tony decided to take out Income Protection Insurance. During a simple Saturday afternoon game of backyard cricket with the twins, Tony tripped and broke his leg. What appeared to be a simple break was more complicated than initially realized and Tony required several reconstructive operations followed by physiotherapy. It meant Tony was out of the workforce for over six months, and while his employer was sympathetic, Tony only had two weeks of sick leave owing to him. Thankfully, Tony’s Income Protection insurance meant he received a stream of payments equal to 80% of his regular wage (including super). The couple needed to tighten their belts a little until Tony was back on his feet but they were able to keep up with their home loan repayments, which would not otherwise have been possible without their Income Protection cover. (via Regleis - insurance and financial services)
If you want to be a proactive person. A person that wants to get ahead of any incident that may happen and to enable and empower your loved ones to make accurate decisions for you in the future, insurance is for you. Insurance isn't just something you pay. Insurance is your strategy to begin protecting the future now.