Why You Need Insurance
We all experience life events we don't expect—and can't control. For instance, we could end up in an accident on the freeway during rush hour. A nagging pain might turn into something serious, requiring us to buy emergency or long term treatment. Or the family home could catch fire, killing a loved one unexpectedly and leaving a spouse or family struggling to survive—and buy a new home.
Though far from pleasant, any of the above scenarios could happen at any time. But if we prepare now to take care of the "what ifs," we can save ourselves major emotional and financial hardship.
Why Buy It?
Quick quiz: what's the first thing that occurs when something unexpected happens?
Answer: well being, security and finances are threatened. Families that once earned enough money to pay the bills, buy clothing and electronics, send teens to college and support loved ones in nursing homes suddenly can't make ends meet—and that throws everyone and everything off balance.
But by thinking and planning ahead, individuals and families can get insured and rely on their providers to help shoulder the burden when there's sudden and serious loss. This helps:
- Limit or eliminate risk
- Protect assets and income
- Provide peace of mind
- Offer a lifeline in stressful situations
Think of insurance as a savings account. As premiums are paid in, money becomes available to buy the way out of unforeseen events like those above. This helps limit out-of-pocket expense and provides the funds necessary to get everyone through—just when help is needed most.
Bottom line: insurance is a wise buy, and one of the soundest investments anyone can make.
Once the purpose of insurance is understood, it's time to examine needs and determine what type of protection you should buy.
While buying most insurance policies is optional, some types of insurance are required by law to protect lender or buyer. For instance, each state sets car insurance requirements individually; so someone buying a new car needs to know and understand those requirements and be prepared to cover the car and everyone on the road around it.
Similarly, all homeowners must buy home insurance in case of disaster. Required by lenders, buying this type of protection ensures physical and financial protection on everyone's part—and helps preserve the buyer's new home.
On the other hand, health and life insurance guard the policyholder against certain vulnerabilities and are also considered essential—but that buy is not required by law. Depending on lifestyle, budget and disposable income, these coverage types may or may not be a necessary buy, but are almost always expert advised.
Now that need and specifics have become more apparent, wise shoppers should explore all the options, consider possible future losses and weigh cost against benefits.
Then follow these tips to help keep rates low:
- Disclose all relevant information that could affect quotes
- Compare apples to apples (different policies with the same or similar coverage)
- Find out what's included—and what's excluded
- Take steps to reduce risk and loss (the insurance provider can help with this one)
- Avoid making small claims
- Read each policy carefully to ensure accuracy
- Review insurance needs at least once a year
Anticipate the Unexpected
When things happen unexpectedly, it's important to be armed and ready with the right insurance plans. By anticipating the unexpected, you can stay protected at minimal cost.