Why Do You Need Insurance?
It is like you have transferred your loss or risk to someone in exchange of money. The one who is buying the insurance policy is referred to as insured and the company that sells insurance is known as insurer and premium is the amount that the insured pays against certain amount of insurance coverage.
- Insurance is required by you in order to dilute your risk of loss that may occur due to some uncertainties. If you are the one who wants to provide your family and yourself a better financial security then insurance surely will form a part of your risk management program.
- Insurance provides you and the assets attached to you with a security against any loss that may occur to you or your assets due to events whose occurrence cannot be controlled by you.
- Think of a situation in which the only bread earner of the family dies or becomes physically/mentally challenged due to any reason. If the person is insured then it would prove as a shield against the financial distress that may be caused to the family members in the hour of crisis. Thus, here insurance serves as a security tool that protects you and your family in case the family’s income comes to a halt.
- Can you predict the future or the uncertainties that it will bring? If your answer is “No” then say “Yes” to insurance. It is obvious you cannot predict what future holds for you until it occurs and when it does you should be safe then being sorry. Getting your assets and yourself insured does not say that your assets will not suffer any loss in future. It says that in case if there is a loss you will be able to swim across safely as the insurance company will compensate you for the loss that has occurred.
- Insurance like Children Plans, Unit Linked Plans, Retirement Plans, Money back Plans etc also serve as an effective tool for encouraging savings through investments in them. Term insurance provides higher protection at lower costs.
- Insurance helps you to buy peace of mind. This means that if you have insured yourself and your family you are prepared to meet the risk of loss that may arise in future thus it helps you to concentrate more on your work and serves as a motivating factor for you.
- Insurance acts as a shield for Mortgaged Properties. If the owner of the mortgaged property dies then the family is deprived of the benefits from the property as the money lender poses his claim on the property. If the property is insured then the insurance company provides the family with adequate compensation so that they are able to settle the unpaid loans.
- Not only individuals, insurance also serves as an agent in reducing losses and uncertainties in business. The emerging business enterprises invest a lot of their wealth in setting up new industries that involve large number of properties. A slight negligence may prove fatal to both individuals and properties and also to the third parties that are involved directly or indirectly with the business. Thus insurance plays a vital role in providing security to all parties involved.
- Even for business minds, insurance buys security as well as peace. By eliminating the risk of loss due to uncertainties, insurance encourages businessmen to work harder and better for profit maximization.
- Adequate term or life insurance policy is required for the “Key Man” or the “Lead Man” of the company. A lead man is the one who acts as the most prized possession of the firm and without whom the firm’s working and profit generation would be affected the most. The disability or death of such a person may come as a serious loss and his family and the firm need to be insured adequately in order to overcome that risk.
- Insurance also helps firms in getting credit where insurance polices act as collateral securities against loans and credit. The insured individuals also get loans against their policies.
- In organizations, insurance also serves as a welfare tool for employees. It is the prime duty of an employer to protect and provide welfare to his employees. Group insurance whose premium is paid by the employer serves as tool to secure the life of the employee and also guards them from accidents, old age, disability or death. When these benefits are provided to the employees they tend to work to the maximum of their capabilities that would help in the growth of the enterprise.