Introduction
When you’re an employee of the government, it’s impossible to avoid thinking about insurance. You depend on your health insurance every time you visit the doctor or get sick, and you rely on your life insurance when something happens to you or your family. While this type of coverage seems like it would be beneficial to have, there are some situations in which it might not be necessary. Is it worth getting insurance as a civil servant? How can you tell if you should get insurance as a civil servant? In order to help you make that decision, here are both the advantages and disadvantages of insurance to civil servants.
Insurance is a complicated thing. It’s not like you’re buying a product off the shelf, so it’s hard to tell if you’re getting the right one or not. With that in mind, it makes sense that people are always asking me if they should get insurance. The answer is yes! But why would I say that when I work for the government? Well, here are some of the advantages and disadvantages of insurance to civil servants:
Insurance
is a system under which the insurer, for a consideration usually agreed upon in advance, promises to reimburse the insured or to render services to the insured in the event that certain accidental occurrences result in losses during a given period. It thus is a method of coping with risk. Its primary function is to substitute certainty for uncertainty as regards the economic cost of loss-producing events.
Insurance relies heavily on the “law of large numbers.” In large homogeneous populations it is possible to estimate the normal frequency of common events such as deaths and accidents. Losses can be predicted with reasonable accuracy, and this accuracy increases as the size of the group expands. From a theoretical standpoint, it is possible to eliminate all pure risk if an infinitely large group is selected.
From the standpoint of the insurer, an insurable risk must meet the following requirements:
1. The objects to be insured must be numerous enough and homogeneous enough to allow a reasonably close calculation of the probable frequency and severity of losses.
2. The insured objects must not be subject to simultaneous destruction. For example, if all the buildings insured by one insurer are in an area subject to flood, and a flood occurs, the loss to the insurance underwriter may be catastrophic.
3. The possible loss must be accidental in nature, and beyond the control of the insured. If the insured could cause the loss, the element of randomness and predictability would be destroyed.
4. There must be some way to determine whether a loss has occurred and how great that loss is. This is why insurance contracts specify very definitely what events must take place, what constitutes loss, and how it is to be measured.
From the viewpoint of the insured person, an insurable risk is one for which the probability of loss is not so high as to require excessive premiums. What is “excessive” depends on individual circumstances, including the insured’s attitude toward risk. At the same time, the potential loss must be severe enough to cause financial hardship if it is not insured against. Insurable risks include losses to property resulting from fire, explosion, windstorm, etc.; losses of life or health; and the legal liability arising out of use of automobiles, occupancy of buildings, employment, or manufacture. Uninsurable risks include losses resulting from price changes and competitive conditions in the market. Political risks such as war or currency debasement are usually not insurable by private parties but may be insurable by governmental institutions. Very often contracts can be drawn in such a way that an “uninsurable risk” can be turned into an “insurable” one through restrictions on losses, redefinitions of perils, or other methods.
Functions of an Insurance Company
1] Provides Reliability
The main function of insurance is that eliminates the uncertainty of an unexpected and sudden financial loss. This is one of the biggest worries of a business. Instead of this uncertainty, it provides the certainty of regular payment i.e. the premium to be paid.
2] Protection
Insurance does not reduce the risk of loss or damage that a company may suffer. But it provides a protection against such loss that a company may suffer. So at least the organisation does not suffer financial losses that debilitate their daily functioning.
3] Pooling of Risk
In insurance, all the policyholders pool their risks together. They all pay their premiums and if one of them suffers financial losses, then the payout comes from this fund. So the risk is shared between all of them.
4] Legal Requirements
In a lot of cases getting some form of insurance is actually required by the law of the land. Like for example when goods are in freight, or when you open a public space getting fire insurance may be a mandatory requirement. So an insurance company will help us fulfil these requirements.
5] Capital Formation
The pooled premiums of the policyholders help create a capital for the insurance company. This capital can then be invested in productive purposes that generate income for the company.
The pros of getting insurance as a civil servant
Getting insurance as a civil servant is a great idea for many reasons. First, it helps protect you from getting sued by a person who was injured because of your actions. Next, if you are injured on the job, having insurance will help cover your medical expenses so that you don’t have to worry about getting stuck with the bill yourself. Finally, it can provide peace of mind knowing that you and your family will be taken care of in case something happens to you while on the job.
The cons of getting insurance as a civil servant
The biggest con of getting insurance as a civil servant is the cost. Most insurance plans are expensive, especially if you’re looking for a quality plan, so it’s hard to justify when you’ll only be earning around $30,000 per year. Health insurance costs can also be prohibitively high for new government workers who have just started their careers as well. If you have preexisting conditions or are likely to develop them in the near future, it can be difficult to find an affordable plan that will cover all your needs.
The final verdict
Insurance can be a good idea for civil servants who are worried about the cost of medical treatments should they get injured on the job. The downside is that it is expensive, so you have to weigh that against your monthly budget. If you work in a dangerous environment or one with high risk factors then insurance might be a good choice. It also may help if you’re at risk for chronic illnesses like heart disease because insurance often pays for more preventative care rather than just covering costs for major illnesses and accidents.
