Why do people purchase insurance?

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Key Takeaways

  • Investing in insurance will allow you to live tension-free and offer security ahead of time.
  • Insurance is essentially a safety net, which allows the insured to explore different and newer opportunities. It is a safety net for situations where things can go wrong.

Insurance can be tricky. You are not buying a physical product but a promise – that you will be covered when something catastrophic happens to your life or business. It means your insurance provider will help you regain your life or business back on track again, financially speaking. It is one way to protect your life, health, and ability to earn a steady income when things go south.

 

The truth is investing in insurance will allow you to live tension-free and offer security ahead of time. Insurance is not just a tax-saving tool but there are several benefits attached to it.

 

Today we will be taking a look at the benefits of insurance and why people purchase it:


1.     Insurance gives peace of mind


An intangible product, insurance provides an invisible benefit i.e. peace of mind. Many businesses and organisations can undertake certain business ventures because insurance allows them to shift the risk to the insurer. Lenders need insurance. It is essentially a safety net, which allows the insured to explore different and newer opportunities.


2.     Insurance provides family and business safety

 

As mentioned earlier, insurance is a safety net for situations where things can go wrong. For example, life insurance can be very helpful and essential in case a family member dies. It’s similar for a business organisation as well. If a piece of equipment or person stops working or dies, the business can continue to operate and go on, thanks to insurance. It ties back with having peace of mind.


3.     Insurance protects the small guys

 

In the business world, there are “big guys” and “small guys”. “Small guys” can be small to medium size businesses. In case of a catastrophic loss, the big guys can manage but the same loss might hit the small business organisations much harder. Due to this, they are prone to more risk and end up being at risk of shutting down in case of any act of god or other insurable risks. This is where insurance comes in.  Providing a safety net to allow businesses to operate for a longer time allows small businesses to flourish, which is good for the economy in general. This way insurance contributes to economic development.


4.     Insurance provides cash when it is needed the most

 

A life insurance policy will provide a certain amount of money upon maturity, or whenever the need arises. When someone you are deceased, your family will be assured of a certain amount of money – which will be available to them almost immediately. It helps to have a smooth sail in the face of financial risks. If you are prone to anything insurance can provide you protection.

 

5.     Insurance provides more financial security

 

Insurance is a financial backup whenever there is an emergency. For example, Healthcare is important and can be expensive, especially in case of sudden and unplanned hospitalizations. Insurance allows you to plan for unpredictable expenses like this, by providing financial security in case of unfortunate incidents.


6.     Insurance helps you manage risks

 

Uncertainty is present in life. You don’t know what your future looks like, making it feel risky to do anything on your own. Insurance provides effective risk management. Risk of falling sick, risk of dying, risk of your house burning down, risk of losing your car – all this and more can be dealt with if you have insurance.

 

With term insurance plans, your family will not have to carry the financial burden during your untimely death. You can get coverage for the given term at an affordable cost.


7.     Insurance helps to secure future goals

 

Today, you might be in a position to provide well for your family, with a steady source of income. But what will happen if you die unexpectedly? How will your family be able to meet their future needs in that case?

 

This is where a term insurance plan helps. With such insurance, the nominee will receive a lump sum or monthly payouts to help with financial burdens.

 

Conclusion

 

Insurance is often something many business owners do not want to think about. But having insurance coverage is only beneficial for you. It helps mitigate risk and allows you to live peacefully and take up new opportunities as and when you see fit. 

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