Insurance: Is it worth the cost?

Introduction

Deciding if insurance is worth the cost is a decision that each person has to make on their own. Whether it’s medical, car or home insurance, there are several pros and cons that come with the expense of having insurance coverage. Weighing the pros and cons of insurance can be difficult, but we’ve created an infographic that will help you decide what’s right for your situation. Take a look at our infographic below and see if you can determine if insurance coverage will benefit your finances in the long run!

Insurance is an important financial tool for protecting your family, business, and property from unforeseen risks. It can provide you with peace of mind and security, but it does come at a cost. Before you make the decision to invest in insurance, it’s important to consider the pros and cons. In this blog post, we’ll explore the value of insurance, weighing the pros and cons to help you decide if insurance is worth the cost. First, let’s talk about what insurance covers: health care expenses; damages due to accidents or fire; life insurance policies; medical coverage in the event of pregnancy; theft protection for belongings. With all these benefits, who wouldn’t want their families protected? However, insurance does have its drawbacks. For instance, health care premiums are increasing every year–often even double digits–while policy prices stay relatively stable. Some states also have caps on how much money insurers will pay out each year or over a lifetime, meaning that some people could be left without coverage when they need it most! When all factors are considered together, it’s possible that opting out of insurance could end up saving someone money over time while still providing them with similar levels of protection (although not as broad). Ultimately, whether or not someone chooses to buy coverage depends on their personal circumstances and risk tolerance level.

The pros of insurance

When it comes to insurance, there are several clear advantages that make it worth the cost which include;

1. Provides economic protections
   Insurance provides economic and finanicial protection to the insured against the unexpected losses in consideration of nominal amount called premium. It provides financial protection to the nominee in case of the pre-matured death of insured. It also covers the loss of properties due to theft, fire, accident and other natural calamities.
2. Shares risks
   People are exposed to various kinds of risks and uncertainties which may cause large losses. It is impossible to eliminate risks and uncertainties altogether but it can be reduced or shared. Insurance is a co-operative device, which helps to share the risks among the insured. Thus, the insurance company redeuces the risk of the insured in exchange for small premium.
3. Maintains standard of living
   Insurance provides financial protection against an unexpected risk of losses due to which people can maintain their living standard. The insurance company provides a safeguard in terms of money to avoid the unfortunate financial crisis.
4. Encourages saving
   An insured person pays the amount of premium in time as stated in the agreement which encourages for developing a saving habit of persons. Hence, insurance is a means of encouraging regular saving as it helps to reduce unnecessary expenses.
5. Eliminates dependency
   Due to death or destruction of properties, the family suffers from unbearable and non-compensational table losses. The insurance protects against those unbearable losses. The life insurance policy gives full financial support to the dependent in case the death of the insured which helps to eliminate the dependency of people.
6. Grants loan
   An insured can get the facility of a loan from an insurance company or can take loan from other financial institutions through the security of insurance policy. Thus, this provision of loan helps a person can also meet the need of fund. Bank and financial institutions prefer the insured assets as collateral for providing a loan.
7. Creates employment opportunities
   As insurance has become business in the modern day business world, hundreds of entrepreneurs and thousands of employees have been engaging in this line. Hence, by establishing and developing insurance companies, it has provided employment opportunities to thousands of people as per their qualification and calibre.
8. Promotes foreign trade
   The growth of the international trade of the country has been greatly helped by shifting of risk to insurance company. A ship sailing in the sea faces some miss-fortune. A fire breaks out and burns to ashes all the merchandise of a business man. But insurance is one of the devices by which these risks may be reduced or eliminated. So industrialists and exporter may devote their full attention toward the promotion of business which may increase the export activities
9. Helps to operate business smoothly
   A business gets financial compensation in case of loss or damage to the properties of the business through insurance. An insurance policy taken for the employees increases their motivation at work. Therefore, insurance plays a vital role to let the business run smoothly even in the situation of unfavorable events.
10. Help to reduce inflation
    The inflation means increase in price of goods or service. Inflation gives painful experienced to the citizen so it should be control. To control inflation, the volume of money need to be reduce. An insurance company takes the money from the people in the form of premium, which reduces the volume of money in the market. Hence, it helps to control the inflation in the country.
11. Help to develop economy
    Insurance companies collect premium through life or non life policies which are invested in various development areas like trade and industry. Such investment helps to promote trade and industry in the country. Ultimately, it helps for the economic development of the country.

The cons of insurance

The following are the main disadvantages of insurance: –

1. It does not compensate all types of losses which caused baisness to insured by insurance company.
2. It takes more time to provide financial compensation because lengthy legal formalities.
3. Although insurance encourages savings, it does not provide the facilities that are provided by bank.
4. It intentionally tries to compensate as less as possible to the sufferer with the aim of maximizing profit rather than maximizing well-being of the insured.
5. It may lead to the crimes in the society as the beneficiaries of the policy may be tempted to commit crimes to receive the insured amount.
6. Sometimes, the total amount of premium might be higher than the policy amount receivable on maturity.