The benefits of insurance are not always readily apparent to consumers. When you purchase insurance, you are purchasing a promise and you can’t park a promise in your garage. However, while the benefits of insurance may be intangible, they are definitely real. These are six of the benefits of paying for insurance.
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Peace of Mind
The primary purpose of insurance is to guard against catastrophic risk. Without insurance on your home, your family could end up homeless if a fire or severe storm destroys your property. Without insurance on your life, your family might not be able to put food on the table or your kids might not be able to go to college if they lose your income because of your death. Paying for insurance allows you to shift the catastrophic risk of a devastating financial impact to the insurance company, in exchange for relatively small premium payments from you. For added peace of mind, be sure to choose an insurance company that uses technology such as an insurance document management system, to safeguard your personal information.
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Protects Small Businesses
Without the protection of insurance, it would be difficult for many small businesses to enter the marketplace. Large corporations can afford to self-insure many types of risks. However, few small businesses have the resources to protect themselves against potential losses without insurance. Purchasing insurance makes it possible for small businesses to compete with larger businesses without being driven out of the market by the fear of uninsurable risks.
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Makes Financing Easier
When lenders loan large amounts of money, such as on a home mortgage, the loan is usually secured by some type of valuable property. In the case of a mortgage, the home itself is usually the security. Without insurance, the lender would be taking a greater risk. If the home were destroyed, the homeowner might be unable or unwilling to make the mortgage payments and the lender would have no valuable collateral to compensate them for the outstanding amount of the loan. Without this protection, financing would be much more expensive and difficult to obtain.
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Keeps You in Compliance With the Law
Most states require insurance for some activities that can result in substantial damage to other parties. For example, many states require all vehicles driven in the state to have a minimum amount of liability coverage. This protects anyone who might be injured or financially damaged due to the operation of the vehicle. This requirement prevents reckless, uninsured drivers from causing damages to other parties that they can not afford to pay for.
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It Can Keep You Healthier
Health insurance is a bit different from other types of insurance. It protects you against catastrophic losses in the same way that other types of insurance do, by covering major illnesses, hospitalizations and accidents. However, it also promotes better health by covering preventative care, such as annual physical exams, eye exams, prenatal care, smoking cessation, blood pressure medication and other treatments designed to improve health and avoid serious health problems down the road.
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Keeps Communities Healthy
Communities function better when members are protected against losses. Without insurance, more people are unable to afford healthcare, become homeless, and can not afford transportation. Many are also unable to afford college education and do not have the money to support local businesses. Insurance allows communities to spread the risk around by all paying a small amount into the insurance company. This ensures that individual members are not financially devastated when a catastrophe occurs.
Because the benefits of insurance are not always obvious, it can be easy to see the insurance company as a villainous entity out to take your money without giving anything back. However, insurance plays a vital role in maintaining a healthy society.
