The Importance of Insurance
Although insurances have been around since the times of ancient China and Babylon, the first modern form was developed by Lloyd’s of London in the 1600’s where the equivalent of today’s underwriters would insure cargo for shipping overseas. The primary principle of insurance has remained the same and that is: the small premiums of the many insure the large risks of all. In other words, a person may pay $100 a month for car insurance, but when that car is completely destroyed, they may get many thousands of dollars back to replace the damage. This principle carries on regardless of whether it is a boat, a car, jewelry, or any other belonging you may have (even your life!) that is being insured.
Many people see insurance as unnecessary and are often angered that they are forced to pay the premiums (for instance, if they want to drive). This anger and frustration often arises from the misconception of what insurance is and the benefits it can provide to you and your family. Certainly, when one buys a $200,000 house or a $20,000 car they would want some protection should anything happen to it. Three benefits of being insured are listed below:
Peace of Mind
Quite simply, being insured offers peace of mind. If you’re insured, you know that should anything happen to you or your belongings, that the price of those things will be covered and replaced by the insurance company. It would be far more stressful being in a fender-bender if you knew that the repairs had to come out of your own pocket. The peace of mind alone given to you when you are insured makes the premiums well worth it – even if you never have to make a claim.
It Lowers Your Risk
In any new venture there is always risk. Perhaps the best example of this is starting a new business. For this there is business insurance and in the case of farming – crop insurance. It would be a nightmare for many business owners if a key piece of machinery was destroyed in a fire, or a crop destroyed by drought. Thankfully, you can have your income insured thereby lowering the risk – so you can focus on more important things – like running your business.
Keep Your Standard of Living
If you ever become disabled or have a critical illness, disability insurance will enable you to maintain the standard of living you’re used to – regardless of whether or not you can work.