A lot of people don’t like to think about buying insurance. But I’ll tell you why do you need insurance.
First, have a think about which kind of insurance buyer you are:
You would like insurance in theory but are so overwhelmed about your present daily expenses that you don’t know where to even find the money for it.
Or perhaps, you get so squeamish thinking about all the what-ifs, that you choose to ignore them outright instead of having a proper plan in place to ease the situation.
Maybe, you put insurance on your to-do list but keep pushing it off in favor of more interesting things. (I get that!)
Or maybe, you’re one of the few who have a hard time putting your money into something that won’t give you any financial returns if you’re fortune enough to never need a payout.
If you identify with any of these points you are certainly not alone.
So why do you need insurance?
Because anything can happen to anybody at any time. You owe it to yourself and your loved ones to do what you can to be prepared if and when it does.
Why Do You Need Insurance?
Insurance is a vital part of any reasonable, responsible financial plan. It’s a way of managing your risks so that you and your family are protected from financially devastating events.
What happens when you buy an insurance policy? What you’re really doing is transferring the cost of a predetermined potential loss over to the insurance company in exchange for a monthly fee. The monthly fee is known as a premium. But you are not just purchasing a potential payout if something should happen. You are also purchasing peace of mind – and that is an important “asset,” too.
If you’re working hard to build wealth and live a happy, comfortable, meaningful life, then insurance is an important part of your financial safety net. Insurance can cover income gaps and help to protect your most significant and valuable assets.
Sometimes, it may be hard to part with those monthly premium payments. But in truth, all it takes is good financial management to free up the necessary money. The Internet allows you to easily research your options to find the best insurance coverage to suit your income and needs.
Your Insurance Coverage isn’t Static
Insurance is not a set it and forget it process. Just as your financial obligations and goals change in different stages of life, so do your insurance needs. The insurance requirements of a young family are very different from those of an older couple approaching retirement. For example, if you have a young family, you would want to take out a life insurance policy as well as disability or critical illness insurance. This kind of insurance can help ease the financial hardship that can come with an untimely death or bodily injury.
With age, as your responsibility to provide for children declines (typically, when people hit their mid-fifties), the primary focus shifts to putting the finishing touches on your retirement nest egg and buffering your healthcare coverage in case you or your spouse are unable to care for yourselves.
But What Insurance Do You Really Need?
While you do want to ensure that you and your assets are adequately protected, there are a lot of insurance policies that are unnecessary. You don’t need to insure everything under the sun. And you don’t want to spend more than you need to, either. It will only do more harm than good by draining your wealth.
Over the next few articles, I’ll discuss three important forms of insurance and most importantly why do you need insurance. There can be other kinds of insurance that you may require. But, if you do want to choose an option, these are the most common and consequential policies to consider:
- Life Insurance
- Disability and Critical Illness Insurance
- Long Term Nursing Care Insurance
Bottom line: If you are working to build a solid financial footing for yourself and your family, then you must protect it. Accidents and disasters can and do happen – often when you least expect them. When adequately insured, you have the financial cushion you need to ride out the storm. And these are just some of the reasons why you need insurance.
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