Most of us learn about insurance through personal experience or what we read in the news. It’s a subject rarely taught in schools or discussed readily as part of everyday life. As a result, not everybody has a grasp of what the real and many benefits of insurance are.
The reality is that insurance plays an important role in society and the community as a whole.
However, for many, insurance it’s still purchased begrudgingly, even though the main benefits of an insurance policy are both financial and emotional.That’s why we think it’s important to explain the benefits of insurance in more detail.
1. Insurance reduces uncertainty and creates freedom.
Insurance provides financial protection for people, families, and businesses in the event of a loss, reducing uncertainty in the future. It reduces the worry that comes with the potential risks of running a business, building a side hustle, owning property or doing the things we love by transferring the cost of potential losses to the insurance company.
In exchange for this peace of mind and reduced uncertainty, customers pay a premium to the insurance company, which varies according to the level of protection they are looking for.
People who are comfortable with uncertainty in certain areas of their life can choose to pay less and have less protection. Other ways insurance may reduce uncertainty is through the provision of specialist services, like access to legal or accounting support. Ultimately, insurance provides people with a greater sense of freedom when making the best choices for how they want to live their lives or run their business.
2. Insurance provides financial security
By purchasing the right insurance policy for your specific circumstances, you can reduce the financial impact of potential future losses. This means that should something happen, you will receive financial compensation so that you can re-establish your living situation or business.
If, for example, there is a theft of stock in your business, and you are covered with the right level of insurance against burglary, your insurance will cover your losses. If there is a fire or other event such as an earthquake or flood, fire and perils insurance will cover your business for damage to your property, including building, contents and stock.
Thanks to this support, you will be in the financial position to rebuild, acquire new resources and continue your businesses.
3. Insurance is about pooling resources to help whoever is in need
Insurance protects people from paying for potential losses out of their own pocket by spreading the cost of losses across a large group of people – that’s everyone who has similar insurance.When you insure your property or business, you’re essentially paying a small amount of money – your premium – into a large pool where others are also paying a small amount. If your property is damaged, stolen, or destroyed, or if you suffer an injury, the Insurer will use the funds from this pool to help pay for repairs, replacement, or compensation.
This concept is known as “pooling” and it’s how insurance companies are able to provide financial protection for their customers. This is a huge benefit for most people who might otherwise struggle to cover the costs on their own. It also helps keep the community more stable by sharing risks.