Risk is all around us. Every day, every single activity comes with a risk. Usually, that risk is that something could go wrong, and when something goes wrong, there is only one thing that follows; losses or damages. No one likes to lose, and so insurance helps to safeguard against those losses. But what is the importance of insurance?
We will be looking at Insurance’s importance, and why an insurance policy is your next best move.
Why do I need insurance?
This is perhaps the most asked about question on insurance. It makes sense; why should you pay money for something that might not happen?
Well, because it might happen.
As much as you’re hoping the mishap you are insuring against might not happen, there is an increased possibility that it just might happen, even when you’re careful. This is because not everything is directly in your hands, so even when you do everything right; someone or something can almost be sure to do something wrong. And they usually do.
Importance of Insurance
While offering protection from many kinds of risk for persons and businesses is a primary function of Insurance, there are many other roles Insurance pays. Here are further importance of insurance;
- Provision of Safety and Security to people and companies:
insurance is like that trustworthy friend or bodyguard that watches your back and keeps you safe. With insurance, there is a peace of mind that comes from going about your daily activities, knowing you are prepared for whatever may happen.
- Generation of Long-term Financial Resources:
In the insurance sector, premiums are paid to buy policies and this results in the creation and circulation of funds. Because insurance policies are usually long term (one year plus), and because most policies are renewable, there is an availability of funds that can be invested in building infrastructure assets.
- Economic Growth Promotion:
building upon the previous importance, insurance and the Insurance sector contribute towards the growth and development of the economy. Insurance properly utilises savings, as well as provides protection against damages and losses, which means there are lesser chances of individuals or businesses suffering much due to an unfortunate event. Reduced losses mean there are no stoppages in economic activity, and that leads to growth. Insurance also allows businesses to be innovative without hesitation; because they know, they have a cover.
- Provision of Support to Families during Emergencies:
as earlier mentioned, anything and everything can go wrong; with the worst part being unprepared for it all. Insurance policies like health insurance help prepare you in the event of any health emergencies. Instead of worrying about what to do next, you can do something.
- Insurance Spreads Risks:
the working formula for insurance is to take a risk and spread it among so many phases that it almost nullifies the effects of the risks. That way, the damages are not so damaging at all, and the insured receives compensation for his or her losses.
If there’s anything that speaks safety, protection and security, then it is insurance. With insurance, you don’t have to look over your shoulder throughout life’s daily activities— and that’s a peace of mind unlike any other.