Do You Really Need an Insurance?

Does Everybody Really Need Insurance?

    Insurance is a way of managing risk. When you buy insurance, you transfer the cost of potential losses to the insurance company, by depositing a monthly/annual contribution known as the premium.

Insurance companies invest funds safely, so that they can grow, and pay out if there are claims.

Insurance isn't cheap, and you probably won't be interested, especially if you've never been sick.

For some people, insurance is something that is unprofitable.

You spend thousands of dollars (and probably more) over your lifetime paying for something you never use.

But having insurance when you need it can change your and your family's lives.

No one can afford all the covers that are available. And if they could, they probably wouldn't have needed insurance in the first place.

Are you saving for retirement or purchasing a home? Unforeseen life troubles can quickly undo all your hard work.

That's why having one or more types of suitable insurance is an important part of every financial plan.

Some insurances are mandatory, such as car cover and health insurance. The other is just as important as reducing your financial risk if something should happen to you.

Insurance is a mechanism to protect people against loss, damage, injury and expenses associated with unexpected events.

Insurance in general is defined as a way of spreading the risk of loss through a pooling mechanism. Insurance provides protection against predictable events that come up unexpectedly.

People who have the potential to suffer losses buy insurance by paying a premium, which is used to cover losses that might occur.

More than any other type of coverage, life insurance has a reputation as a snake oil salesman. That's partly true, because a lot of irresponsible insurance agents, try to force insurance on everyone.

But in fact, life insurance is not only useful, but also important for some people.

Many people put off buying insurance for a number of reasons, even though they understand it. Look at these sentences. Do any of them sound like you?

Insurance is too expensive.

In a young family's growing budget, things like child care, car payments, and student loans, cost a lot of money each month, and many people think that life insurance doesn't meet those "needs" when spending is tight.

But life insurance often isn't as expensive as you might think, especially when you can get a good policy for less than a cup of coffee a day at the local cafe, and if the money is running out now, what do you do if something happens to you?

I have life insurance through my office

Many people get life insurance as part of their employee benefits coverage, sometimes, it's their first time knowing life insurance, and they think that the insurance policy is worth a lot, but in fact, it's not as much as they think.

You feel strong and healthy.

You eat and you stay active. Friends and family marvel at how healthy you are! It's unlikely that anything bad could happen to you, though it could be that, when you're feeling healthy and strong, there's no better time to get an insurance policy to cover your loved ones. If you become seriously ill or seriously injured in the future, it can be even more difficult to get an insurance policy.

I have no children.

Children are an important reason why some people purchase insurance. But that's not the only side in need of protection.

If there is someone in your life who is going to suffer financially from the loss of you, your husband or spouse, even your parents, a life insurance policy goes a long way to ensure that everyone stays well-off, even if something happens to you.

Do you have dependents that require your financial support?

This is the most important question for consideration. If you have no dependents, you may not need life insurance, or you can purchase a smaller insurance policy to cover your own funeral expenses, and any debts you leave behind.

If you are a parent with children, life insurance is your primary means of financial protection to ensure your family can survive should something happen to you.

The younger your children, the more money you should have on your life insurance policy.

Many parents take off their life insurance after their children graduate from college, and are free from the burden of their parents. Others have life insurance to make sure their spouse can still live a comfortable life. While still others keep a life insurance policy, to help support a parent, sibling or friend who depends on them for financial security.

Family life insurance policies may offer discounts to protect more than one member of the same family.

Is Life Insurance Helpful?

You only really need life insurance if someone is relying on your earnings.

If you own a home with your partner, or have children, you should seriously consider getting life insurance.

Only buy insurance when you need to replace your income

Life insurance, really for couples or families who want to replace your income when you die, so that your partner or dependents are not abandoned. (investopedia.com) That's why single people without kids don't need a life insurance policy, because nothing depends on their income.

Most insurance agents recommend purchasing life insurance if you share a mortgage with someone. It's very difficult to sell a house fast if you need the money, and a life insurance policy can help your family make mortgage payments, if they decide to live in the house.

If you own your home outright and don't have children, you probably won't need an insurance policy.

Remember! Having life insurance is not just about having a convenient windfall in the event of a loved one's death. It's also about protecting yourself and your assets, so you don't have to drastically change your lifestyle if something goes wrong.

Types of Insurance You Probably Don't Need

While you want to make sure that you are adequately covered, there are many insurance policies that are not necessary for you. Purchasing the wrong insurance, or paying too much, for it can do more harm than good.

Types of insurance you probably won't need include mortgage life insurance, sometimes called credit life insurance; insurance for certain cancers or diseases; and travel insurance or air travel.

In the case of travel insurance, for example, this may be included as part of your credit card's travel benefits. Before purchasing this type of insurance, think carefully about the return on investment that you might get.

What type of life insurance is suitable for you?

After you have decided how much life insurance you need, the thing to consider is the right type of life insurance.

You can choose a term insurance policy, which covers you for a set period of time, and tends to have the lowest premiums of all the life insurance options.

You can choose permanent coverage in the form of whole life cover, variable cover or universal whole life cover. Although these policies may have higher premiums, they offer lifetime coverage benefits with the potential to build cash value.

It is very important to weigh the pros and cons of both and compare them to your life insurance needs.

Why Health Insurance Is Important

Health insurance premiums may seem like a large part of your budget. However, this lack of insurance can make your expenses much more expensive in the long run.

Not having health insurance can cost you large medical bills in the event of an unforeseen injury or medical crisis.

If you are an adrenaline junkie, health insurance is essential should you get into an accident while pursuing your thrilling passion.

You really can't predict a medical emergency, and it can potentially bankrupt you if you don't have insurance.

If you don't have insurance, you'll have to pay for all prescriptions, tests and medical services. These are services that keep you healthy and detect potential health problems that can cause problems—both physical and financial—in the future.

Income Protection Insurance

It's fine to consider income protection insurance as high priority insurance.

If you get sick, have an accident, are unemployed or unable to work, this will provide you with replacement income, and it's tax free.

Protecting your income in this way can prove very important, especially if you have family members whose well-being depends on the money you bring in, or if you are self-employed and unable to cover your own living expenses.

If you find yourself unable to work, that loss of income can make unemployment even harder to deal with, for yourself and your dependents. So paying for income protection can give you peace of mind that you and your family will survive if your work situation changes dramatically. However, it's still important to find the right type of insurance, and only pay for what you absolutely need.

Do you have an expert opinion?

Some people find the experience of purchasing health insurance overwhelming, and there are many insurance agents who can help you sort through your insurance options. These insurance agents spend their days immersed in the insurance world, and can work quickly to find the plan that works best for you.

Find an independent insurance agent who can give you the best offers from various health insurance companies.

So Do You Really Need Insurance?

Of course yes. No matter how much or how little money you have, the answer is always the same. Don't think that it's going to save you money by not spending it.

Imagine that you are finally taking control of your finances and building up a $1,000 emergency fund. Only to make you or your husband suddenly sick and in need of serious medical treatment or surgery.