Insurance by definition is a risk-transfer mechanism where an insurer agrees to provide full or partial financial compensation in the event of a damage or loss of the insured’s asset in return for a fee known as the premium. From the definition above, it is clear t h a t t h e r e a s o n p e o p l e b u y insurance is to transfer the risk of financial stress or loss of something valuable to an insurer when the unexpected event or eventuality occurs, such as a vehicle accident, burglary, permanent disability or death.
Whilst some people may think they are good drivers, they have security systems in place, they will forever be able-bodied or even that death is still very far from visiting them, the unexpected can still happen and one would need to replace the lost/damaged asset(s) and dependents would need to replace the source of income in the event of a breadwinner dying.
What are the key benefits of having insurance?
- Peace of Mind
If your valuable assets are insured, it gives you peace of mind knowing that if anything happens to them, your financial security is guaranteed. For instance, if you know that there are people who are dependent on you financially, having a life cover gives you peace of mind knowing that they will manage even in your absence.
- Financial security
Having insurance gives you financial security in the event of the insured event occurring. When your valuable assets are insured and the unexpected event occurs, you will not have to fork out a lot of money to replace the same as that is taken care of by the insurance.
- Reduces stress
Having insurance reduces stress during the unforeseen tragedies such as death. Someone with funeral cover will have time to grieve the loss of his or her loved one while his or her policy takes care of the funeral expenses. I m a g i n e y o u a r e t h e breadwinner and you have just lost a loved one but do not have a policy in place. It means one would have to run around to look for money to pay hospital bills left by the deceased, buy a coffin, buy groceries for use during the funeral wake and even transport mourners to the burial. All this may take a financial toll on you but if you have a funeral cover, the majority of these things would be taken care of by the policy, which allows you to give your loved one a decent and dignified send-off.