RISK AND UNCERTAINITY – WHY YOU NEED INSURANCE?
RISK AND UNCERTAINITY – WHY YOU NEED INSURANCE?
Life is full of risks and uncertainties such that no one has the ability to precisely predict what is going to happen in the next hour, day, week or month. Uncertainty implies that, there is always that possibility of things not going according to one’s plan or agenda and this could result in enduring losses for which one is not prepared for. Much of the risks and hazards that we encounter on a daily basis can either be transferred, avoided or accepted. Insurance becomes one of the methods for risk transfer and the most common insurable risks are property fires, vehicle accidents, drowning, employee injury at work, theft, malicious damage, just to mention but a few.
By definition Insurance is a contract, represented by a policy, in which an Insurance company undertakes to provide a guarantee of compensation for specified losses, damage, illness or death in exchange of payment of a specified premium. Throughout our lives we accumulate valuable assets and should any eventuality occur which threatens the existence of those assets, we stand to lose financially but with insurance, we are guaranteed of a full compensation for any loss or damage to our assets.
The following are the major benefits of having an insurance policy as this enables one to:
- Maintain and protect your standard of living, for example if one’s car is involved in an accident where it is damaged beyond repair. Now, if the owner has no readily available funds set aside to purchase a new one, this might mean that they will now have to rely on public transport and this will surely not be an easy adjustment to their way of living. Insurance enables one to repair or replace the car.
- It offers peace of mind for both business owners and individuals by way of guarantying financial security and this eliminates worry about what the future could hold.
- Certain type of Insurance policies like Assets All Risks or Keyman personal accident can qualify an organization or an individual for a loan with the banks as the policy can act as collateral. In other words, insurance increases credit worthiness.
- Insurance enables the insured to concentrate on their work without fear of loss due to risk and uncertainty.
- It protects your income from unexpected and unbudgeted for expenses. In the case of a business entity this might mean having to release funds towards the funeral of a sudden death of an employee while for an individual this might be payment of hospitals bills for a family member injured in an accident.