11 Reasons Why You need Insurance
One of the main and important reasons why you need Insurance is simply because life is full of uncertainties. The unpredictability of life is the driving force behind insurance. Before we dive into why you need insurance, let us first understand what insurance is and what it entails.
What is Insurance?
Insurance is basically a means of protection against a potential financial loss. Insurance covers is an insurance product that protects specific risk areas of potential financial loss. For instance; you have just bought the New iPhone 14 Pro or a Samsung Galaxy Z Fold 4 smartphone. Then it gets stolen or is damaged beyond repair. Let’s look at the possible scenarios after this happens. 1. If your gadget is not insured then that is the end of it, you lose it and you will have to incur another cost to replace it. 2. With an insurance cover you are rest assured that your gadget will be replaced. With insurance there is an element of restoration.
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11 Reasons why you need Insurance
For Peace of Mind
why do we need insurance top 5 reasons: Everybody desires to have a peace of mind and uncertainties are a big contributor to worrying. These uncertainties may include; loss of job, inability of your debtors to pay you, theft and so much more. Taking an insurance cover is a way to get protection against losses arising from different uncertainties in life. This in turn gives you a peace of mind, you don’t need to worry about losing your assets or whatever you have insured.
Having an insurance cover gives you an element of continuity, in spite of the financial loss, having an insurance cover restores you to the position you were in before. This implies that you don’t need to start from scratch but rather you continue from where you were before the financial loss.
It is cheaper
Simply put, it is cheaper to pay insurance premium than paying for the actual cost of the loss. Normally insurance premiums are a small percentage of the total value of what you are insuring. Imagine you have bought the new Range Rover and you are only required to pay 7.5% of the value to get a comprehensive cover. This implies that in case of an accident, your insurance company will restore you to 100%, remember you only paid 7.5%. Is that not cheap?
As a savings plan
Nowadays insurance companies offer products that act as saving plans. For instance, there are insurance covers that are goal driven and offer you the opportunity to earn superior returns. Such covers can enable you to plan and achieve your goals, whether it is saving for a child’s education, creating a fund to start or expand your business, and so much more.
It is a requirement or Mandatory
In some countries, having an insurance cover is a must. Other than it being mandatory, it offers you a sense of assurance in the event that you incur a financial loss on the insured asset. Taking such mandatory insurance covers make you a law abiding citizen or resident and this is another reason why you need. Insurance
Tax benefit on Insurance Premiums
When you take some insurance covers, there is a tax benefit to it or tax relief for that matter. Imagine you are protecting yourself at the same time you are saving some money in terms of tax relief. In Kenya for example; Insurance relief is offered by the government to all life insurance policyholders. Resident individuals are entitled to relief on premiums paid for life, education and health policies. Every resident individual is entitled to an insurance relief of 15% of the amount of premiums paid for self, spouse or child, subject to a maximum of KES 60,000 per annum. This is one of the 10 benefits of insurance.
To ease the financial burden
Having an insurance cover eases the financial burden. This is one of the reasons why you need Insurance. Some unpredictable circumstances like having a medical emergency can really tear down your financial well being. With a medical insurance cover (health insurance), you are protected against this financial burden.
For protection of the unknown
In life we usually deal with so many unknowns. There is a higher chance that most people will insure themselves against known risks which are obvious like insuring your car against an accident or theft. There are those situations that are not well known or are very unpredictable. For instance political instability, the good thing is that insurance companies offer Political Risk Insurance.
Another reason why you need Insurance. Imagine you got involved in an accident and your car is damaged. Without insurance you will have to look for a mechanic to fix it as well as spare parts to replace the damned areas. This will cost you money and time not to mention the inconvenience. When you have insurance cover, you don’t need to worry about inconvenience, your insurer will take care of all this.
Social responsibility – To provide Job Opportunities
As human beings we are interdependent, everybody needs somebody and we all need to elevate one another. When you take an insurance cover you are not only protecting yourself but also protecting another person who earns a living from that insurance company. This is another important reason why you need Insurance
Return on Investment
Some Insurance policies act as investment platforms, for instance Life insurance. Life insurance policies yield better than many investment alternatives and their risk is minimal. In this case you are not only covering a risk but also benefit from the cover in terms of returns. Some of these policies include bonuses and this is why life insurance is important.