Simply put, insurance is a way of managing risks in such a way that you (the consumer) will not be affected to badly financially should and unfortunate and unforeseen event occur. There are countless reasons why we all need, amongst others, car insurance, business cover and home insurance. Some of these reasons are discussed below.
The biggest and broadest reason why we need the different types of insurance is because we do not know what the future holds. The reality is: we are not always able to protect ourselves from other people or from nature. Because of this uncertainty, it is essential for us to provide for the risks that we take on as we purchase assets. In other words, we must provide for any misfortunates which might transpire. Driving, for example, poses the risks of theft and/or damage to your vehicle due to your or someone else’s negligence or a simply unfortunate natural incidence.
The other big reason to ensure one’s self is to avoid huge future costs in the event of bad luck. If there is a big storm, for example, one does not want to worry about the financial strain as big as the storm when s/he is insured because the insurance company should take care of the damages. Another relevant example to this point is the financial implications that come with the passing of a breadwinner. To avoid leaving loved ones without any money to bury you, let alone survive financially after that, it is wise to take out life insurance so that loved ones do not suffer when you are gone.
Many types of insurances exist in today’s world and many of them are very useful given the life expectancy rate, many occurrences of accidents, natural disasters, different sicknesses and diseases and theft in the modern world. Taking out an insurance policy for everything could prove to rather expensive. Individuals must assess their situations and only take out the insurance that they really need. For example, it is not very worthwhile to take out an insurance policy for damage due to floods if you live in the Sahara.