Some of us may believe that we have enough money to replace our assets should something happen to them. The problem, however, is that the expenses incurred after an accident, or a disability or the death of a loved one can in most cases exceed any savings or wealth we may have accumulated. It is for this reason that insurance is an important component of financial planning.
Some of us may believe that we have enough money to replace our assets should something happen to them. The problem, however, is that the expenses incurred after an accident, or a disability or the death of a loved one can in most cases exceed any savings or wealth we may have accumulated. It is for this reason that insurance is an important component of financial planning.
Purchasing insurance coverage is indeed more economical in the long run than using your hard-earned savings to pay for the loss or damage of assets, especially when it is an expensive expense.
What is insurance?
Insurance is a risk transfer mechanism that shifts responsibility for losses to specialists called insurance companies who handle the risk by spreading it over a large number of people or firms. Insurance can help you cover the costs of unexpected events such as theft, illness or property damage. If you buy insurance for any of your assets, the insurance company will pay you an amount equal to the value of the asset that was lost. You can also purchase life insurance to protect your loved ones upon your death.
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