Why do I need Insurance : Reasons for Insurance

The basics of insurance are deceptively simple. Pay a small amount of money to the insurer, in the event of the unexpected he'll cover the cost and ensure replacement. more formally, Insurance means you pay a small stable predictable amount (called the premium) to protect against a much larger and unpredictable expense( called the loss or the claim) In essence the risk is transferred to the insurance company for a fee (premium)

Why do I need Insurance?

Apart from the occasions when its mandatory, you need to ask yourself two important  quesions before you get any insurance policy. (I will go into the details of types of insurance much further down.)

1. Identify the risk you are insuring yourself against
   It is not enough to say you feel unsafe then rush to a broker and buy any policy. Do you need life or death insurance or property insurance. Or do you want to insure against the possibility of sickness that will prevent you from going to work.
2. Consider both the chances of the risk occurring and the consequences of its occurrence.
   Think about it. There is only a small chance of your house getting burnt, but you cant handle the consequences. On the other hand, the probability of your car being scratched or even stolen are higher but the consequences are much milder. Considering the two you may very well decide to get top of the range house insurance and basic car insurance or vice versa. You will surely die one day. When that happens your family will have to pay for the cost of your burial in addition to being deprived of your incomeand presence. Is there any way to cushion that blow?
   

As a rule, If you cannot bear, or do not  want to afford the consequences of the risk occurring then insurance is necessary. a second rule is that the seriousness of consequences is more important than the risk of any event occurring.

I will list and explain the most common types of insurance

1. Health: This is an insurance policy that will cover the costs of treatments for many of the diseases that you may ever have. Disability insurance will cover your living costs if you get disabled.
2. Life: Life is one thing that can never be duplicated, and yet we continue to insure it. however it is not you who'll benefit per se.Life Insurance will provide funds for your family and loved ones when you die
3. Property Insurance: This insures your property and possessions against things like fire, vandalism and the ravages of weather.
4. Car Insurance: Automobile or Vehicle insurance covers the risk of accidents or car theft.
   

There are many other kinds of insurance such as Casualty insurance,Catastrophe bond, Insurance, Charge-back insurance (protects from the risks inherent in accepting credit cards),
Corporate-owned life insurance (your employer takes out the policy to cover the risk to them of you death) Crime insurance (targeted at the risk that an employee will get involved in activities damaging to the company.

For farmers,Crop insurance protects against crop damages and crop failure even if it is caused by a natural disaster. Pet insurance policies protect you against the cost of treating your pests medically, or their death/theft.

Finally, we all need Insurance. That is a fact. Yet as you can see there is an almost endless variety of Insurance policies. Buying numerous policies may neither make you feel more secure nor improve your quality of life. The best advice is to consider what is most important to you, the consequences and cost of its loss. Then and only then, speak to an insurance policy provider. Professional advice is very important and should not be ignored. speak to at least two professionals who can read fine print before you take up any policy.