Top Five Reasons To Have Insurance

The older we get, the more responsibilities we acquire. The more responsibilities we take on, the more risks and uncertainties life throws our way. Almost every aspect of our lives involves some risk, whether it be creating a family, starting a business, building a home, or driving a car. Though it may be scary to think about the curveballs that life throws at us, there is comfort in knowing there is a financial product that can reduce some of the risks we bear.

Simply put, insurance is the purchase of protection for events we prefer not to cover out of our own pockets. We have compiled the top five reasons to purchase insurance.

1. Insurance provides peace of mind for its users.

Many users of insurance purchase insurance for peace of mind when things go wrong. None of us can predict when natural disasters will strike, when a fire will occur, or when we will pass away. Purchasing insurance can provide the peace of mind of knowing that some financial compensation will follow if one of these unfortunate circumstances occurs.

• Business insurance, for example, protects business owners from losses caused by the normal course of business. Businesses can take on certain ventures because they have the peace of mind that they can shift some of the risk they will assume through purchasing insurance coverage. 
• As it relates to loss of life, insurance can act as financial protection to replace income in the case of the death of a breadwinner. Death is a part of life, so life insurance protects your loved ones who are left behind to sustain the same quality of life that they had before. 
• Another common safeguard for your loved ones is health insurance. Health insurance eases the burden of high expenses for unexpected medical emergencies. For example, if you or a loved one requires surgery, and you have medical insurance, your chances of receiving better health care are much greater. Knowing this fact will allow for many persons to live more comfortably without the worry of exorbitant medical bills.

2. Insurance reduces the loss in inevitable circumstances.

In The Bahamas, natural disasters are very common as we commonly experience hurricanes. In other parts of the world, natural disasters include earthquakes, tornadoes, and flooding. These natural disasters wreak havoc and cause property damage to homes, businesses, and automobiles. Having insurance can act as a safety net for these disasters as they would compensate the policyholders for some of the damages.

Auto insurance would be very familiar because it is mandatory to have an auto insurance policy. Accidents happen almost every day in The Bahamas and it is best to protect yourself is it happens to you. Comprehensive insurance has saved many persons thousands of dollars in accident both caused by themselves and by others. See our article on the difference between comprehensive versus third party here.

3. Insurance is sometimes mandatory to take on credit

For most financial institutions, it is mandatory to have life insurance to cover the principal amount of a mortgage. This provides the lending agency with some comfort that they would be able to recoup their funds in the event of death. In some business loans, business owners must similarly have coverage for their loans.

4. Insurance products can act as saving vehicles

Life insurance products can act as a savings vehicle for individuals. Many life insurance policies carry cash value, which can provide a cash settlement if you decide to end the policy. While this sum is often lower than the life insurance value, it can provide emergency funds for individuals as well as cash for retirement funding. Those small amounts every month can easily add up to a sizable amount of cash value at retirement.

5. Inheritance and final expenses

Life Insurance is a good way to leave a decent inheritance for your family and loved ones. In many cases, it can provide life-changing wealth for future generations. It is also common practice that life insurance proceeds would be used to cover final expenses that an individual may leave behind. This lowers the chances of your loved ones inheriting your debt. These include funeral expenses, outstanding loans and obligations, and estate taxes to name a few.

Life throws curveballs at us all the time and it is not wise to go through life thinking that we can handle all of them. While we cannot fully protect ourselves from everything that will occur, there are many cases where insurance can provide the peace of mind and protection that can reduce some of the challenges we face. Sleep better at night with peace of mind as you continue to GET MONEY SMART.