Today we feature our guest blogger, Romelle Greenidge. He graciously accepted to share his expertise on insurance:
Movies give the impression it comes into play automatically and money is given out whenever someone dies or an accident occurs.
Yet all day, online or on television, we are bombarded with insurance ads. Companies tell us how cheap it is and how easy it is to get it. People call us randomly to offer house, car or even life insurance.
Before you seek to obtain insurance, you should have an understanding of what insurance is.
Insurance is a risk transfer mechanism whereby an individual (insured) can shift some of the uncertainty of life on to the shoulders of someone else (insurer) and in return for this service payment is obviously made (premium). So in layman’s terms, the primary function of insurance is to provide economic protection against a possible future loss. But to be clear, insurance does not cancel out uncertainty but what it does or at least should do, is offer financial assistance to the one insured that may be affected by such. Simpler put, insurance cover permits “the victim” of the loss to return to the financial position (or as close to as possible) in which they were in prior to the loss. There are of course many types of insurance but they will generally carry the aforementioned primary function.
Now that you have an idea of what insurance is, the question you should ask yourself, is it necessary?
By law, some insurance coverage is mandatory. For example, in some countries car insurance is required by law. But of course, if it’s not required by law, why else should you get it. Your main reason for getting it should be protection.
As mentioned before, insurance protects you from that future uncertainty. So in essence an insurance agent would encourage you to get insurance now because it may just be very beneficial in the future.
Of course, you are thinking but who says I’ll get in an accident or die young or get a chronic illness. That’s just it. There’s uncertainty and with uncertainty there will always be multiple outcomes. Look at it this way, without insurance, most cancer patients will go untreated, considering a year’s treatment can run into the millions. Hurricane victims may never be able to get back to where they were before the loss without insurance. Therefore it can be deduced that insurance provides cover for your investment as well.
At the end of the day, seeking insurance it up to the individual.
Before you decide which road to take, the best advice I can really give is to do your own research. Weigh the cons and the pros and make informed decisions.
Remember: A good decision cannot be made with inadequate information.
Written by Romelle Greednidge