What makes insurance so important in our life

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What makes insurance so important in our life

28
Aug,2017

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Why do you earn?

“I earn to provide a secured future for me and my family”, should be your answer.

But is that really enough? We live in a society where each and every citizen is dependent on each other in every way possible. In times of earthquake, hurricanes or any other massive disaster, we all unite to fight against the social maladies. For we people believe – “United we stand and divided we fall.”

The same theory is applied in an insurance policy.

The importance of insurance policy lies in initiating an act of unity.

How insurance works

To make it easy to understand, let’s say there are 10 people in one particular area. Every year this place is hit by cyclone in the months of monsoon, and one man loses his house to this storm. This one man could be any random one.

So these 10 people decide to contribute some amount monthly to make a fund against this cyclone. Any one of these people who suffers a loss will get help from this fund, and with this money his house will be reconstructed.

This way, there is a social harmony and also a strong economic measure maintained to share the events of risk among the people.

This is done so that one man need not carry the heavy burden of compensation, and the cost is distributed among all the people. This method of safeguarding financial loss and equalizing the risk factors is called insurance.

The importance of insurance policy:

There is an insurance for anything that you own, including your health and life, because you can never predict the possibilities of a bad outcome.

No matter how much savings you have, how much is your income, I always advise you to go for insurance so it becomes easy for you to repay in times of loss.

Listing the importance of insurance policies are endless, but we will discuss the vital prospects so that you become aware to buy one before it gets too late.

Why to go for life insurance

By buying a life insurance you are not giving yourself and your family a chance to fall down, god forbid, if anything real bad befalls on you.

Life insurance helps by offering monetary support to you and those who are relied on you both financially and emotionally.

Life insurance must become a necessity. This can also be utilized as a term of savings.

You pay premiums periodically and it is accumulated by the insurer. If you think you might need the cash and you want to liquidate your insurance policy, you can do that any time at your free will.

It is giving you a chance to save alongwith providing financial security.

In our nation, there are certain criteria where tax is not applicable on the interest amount. Hence it can be used as a tax-deferred savings plan.

Why get yourself medically insured

Illness is a part of normal life. It is always said prevention is better than cure.

Getting financial precautions beforehand to cater the unexpected costs should never be overlooked.

Health insurance is a mandatory device to use in times of medical needs. In recent days, medical bills are shooting up like a jet stream.

The health insurance policy will give you a lump sum coverage for your medical treatments. In our country, health insurance comes with a lot of benefits. One of them is the dental insurance, that usually comes free with the insurance package.Try to make use of this by inquiring your insurer while signing the documents.

Your home needs assurance

Just like us, our homes are also prone to accidents and hazards.

Be it fire, flood, construction damage or earthquake, they all need insurance.

Our nation started to understand the value of home insurance when the disastrous fire in the history of Philadelphia broke out and Benjamin Franklin with his officials formed the Philadelphia Contributionship. The oldest form of fire insurance policy in US.

It will be difficult for you to compensate a property loss on your own. So what insurance will do is provide you a vast coverage on your damage cost.

Obviously there are policy inclusions and exclusions. If the damage is not an accident but an intentional one, then the company is not liable to pay for the loss.

With home insurance policy, I would advise you to go for a high premium and low deductible plan. Usually the cost of repairing a house is very high. So, understand the agreements thoroughly before buying a policy.

The only thing to keep in mind is there are different insurance policies for different risks. A fire insurance won’t pay you in case of a flood damage. So understand the geological condition of your place and opt for a suitable plan. If your place is prone to earthquake, then you might not need a flood insurance. You will be making a loss in choosing wrong coverages.

Your car needs a cover just like you

Needless to say, auto insurance is a must have these days, given the rise of traffic and careless drivers on the roads today.

You just never know when two vehicles will kiss each other. So covering up your car beforehand is the wisest decision.

Auto insurance is mandatory by law in several states. Of all the properties, vehicles have the highest of risk factors. Taking a single chance could bring you in deep holes of finance. It’s better to get your cars insured so that you don’t have to dig a deep hole in your pocket in times of repairing a big dent or damage.

Now that we have discussed the importance of insurance on an individual basis, it’s time to declare its pivotal role in establishing an unified society.

Insurance helps in building the social economical background

It is no doubt that all the people of a nation walk hand in hand. It is therefore our duty to build a flourishing society. The insurance companies invest the collected insurance amount on social institutions like banks, universities, hospitals and industries. This investment is made possible by us, the citizens of the nation.

Insurance is vital in borrowing credits

Creditors and lenders will always ask for an insurance when you take out any major form of credit. If it’s a mortgage or a car loan, then going without insurance is a dumb act.

Insurance keeps a business going

No successful financial business can keep going without insurance documentation. There are so many risk factors associated with a business, that insurance becomes the first priority.

The only thing you need to look out for are fraud insurance companies that make money by not consenting to claims and cheating on their customers. Beware of these companies as insurance is a question of trust. Always read the documents carefully before investing.

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