The main reason for buying insurance is for protection, especially for your loved ones. Life is unpredictable and in as much as we plan, life tends to throw us unexpected events that can leave us financially worse off.
For most people, insurance is unexciting and especially when you are paying premiums without seeing any tangible benefits. It therefore human nature to seek more exciting financial products like investment where you can see your money grow.
Insurance is a critical part of financial planning that ensures the investments you are making are protected. Insurance ensures you won’t have to pay the full cost of a loss.
Why do people buy insurance ?
People buy insurance mainly to:
- Cover their loved ones against financial loss upon their demise
- Plan for their children’s education
- Plan for their retirement
- Cover things of high value –such as a house, business equipment, household content, jewellery, – these things would be very expensive to replace.
- Cover against disaster – such as flood, fire or accidents
- Cover a liability – to provide financial protection if you are sued – for example, a customer could sue your business for injury while at your business premises
What to consider when taking insurance
Choosing an insurance policy is a matter of identifying what is important to you, is it your family, house, car, business, your watch, laptop, camera e.t.c. Please note that it can be more than one thing that is important.
- What matters- Choosing insurance is a matter of identifying was is important to you. Is it your family, house, business, your watch, laptop, camera e.t.c. Please note that it can be more than one thing that is important.
- Life stage- our insurance needs vary in the course of our life. For example, the insurance needs of a young university student, a middle-aged career person and a retired person are totally different. It is important to consider where you are at and what matters at that stage.
- Does it meet your needs – buying insurance is a financial commitment and it is important to know and feel that your needs have been met. Our needs vary from one individual to another and from one business to another.
- Is it within your budget? – buying insurance is a financial commitment. It is important to get a cover that balances both your needs and budget. Engage your insurer to get a better understanding of what discounts they can give without compromising coverage.