Ryan

What is Insurance For?

We all know we’re required to have insurance in various areas of our life–if you own a car or a house, you’ve got insurance for those. If you have dependents, you’re probably interested in life insurance and disability insurance. At least in this country, while you’re not required to have medical insurance, it’s strongly encouraged (I run into people every day in my work who don’t have medical insurance and it is a huge problem for them and for the country at large). But what is insurance for?

In a nutshell, insurance is to have some way to pay for potentially huge expenses, particularly those that can happen accidentally or at least through no fault of your own.
For instance, when I need to go to the doctor, I pay a copay–typically $15 in my case–and my medical insurance (which is funded by my employer) pays the rest. Without the insurance, my visit might be well over $100. When my truck was broken into and vandalized recently, my vehicle insurance paid for the repairs after I paid my deductible ($500). If I die, my survivors will receive several hundred thousand dollars in addition to whatever money I have saved up through my life insurance policy. And if I had no insurance for my home, in a fire I’d be left homeless and broke.

While insurance can be costly, depending on many factors including how risky you are to insure, life without it can be very difficult.
If you don’t have medical insurance it’s often difficult to find a doctor who will care for you. If I lack life insurance and I die, my survivors will be left with very little aside from my savings. However, it’s important to consider when you’re paying too much for insurance.

Shopping around for insurance is a wise idea; for car insurance, for instance, I found hundreds of dollars of variance when looking at comparable coverage. It might also pay off to see if any memberships you have might get you a better rate. And look at your deductibles and consider making them as high as possible; when your deductible is higher, you pay less in premiums (just make sure you have enough in your emergency fund for the deductible!).

Insurance is, in many ways, a necessary evil. Yes, it costs money, but there are ways to minimize that; more importantly, however, it’s necessary for lots of purchases (like cars or houses) and in the case of a disaster, it’s an absolute necessity. While it doesn’t thrill me to pay my premiums, the alternatives are much, much worse. Insurance is for peace of mind as well as financial security.

One Response to “What is Insurance For?”

  1. Finance Entryon 20 Mar 2009 at 7:54 pm

    To Find Cheapest Life Insurance

    The price you pay for life insurance depends on many factors, including your age, your health, your habits, and even the insurance company you choose.
    Before you begin looking for a life insurance quote, you need to decide what kind of life insurance you want. There are two major types: term and whole life. Whole life costs more because it includes an investment feature, while term is the cheapest form of life insurance because all you’re buying is insurance.
    The best way to get quotes to compare is to visit an insurance comparison website. There you will find all the necessary information regarding life insurance.

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