For you to enjoy all the benefits of the insured, there are the costs you incur. This cost is what transfers liability to an insurer.
Cost of Having Insurance
1. Premiums
It is the core cost you will incur when you take insurance coverage. Whenever you approach any insurance company for certain insurance coverage, they will ask you to pay for premiums once qualified. Some insurers want you to pay premiums annually, while others will accept monthly premiums.
The nature of your coverage determines your premiums. Take insurance in the world of car insurance; premiums for comprehensive coverage are more expensive than third-party insurance coverage’s premiums.
2. Deductibles
This is the second area that will cost you when you have insurance. A deductible is an amount you have agreed to pay in case of risks of loss before the insurer compensates you for the remaining part. In simple terms, it is the proportion of loss you accept to be liable for in case of a risk of loss suffered.
You are responsible for determining how much you want to pay as deductibles. If you want to pay less deductibles, you commit to higher premiums. On the contrary, if you want lower premiums, you commit to higher deductibles.
Benefits of Having Insurance
1. Indemnity
An insurance cover intends to indemnify you once you have suffered risks of loss. Indemnity requires an insurer to put you in your exact financial position before a risk of loss is suffered. This allows you to bounce back from risks of loss that could otherwise have offset your financial stability.
2. Peace of mind
Insurance allows you to transfer the risk of loss to another party. You do not have to worry about your financial health in case of a risk of loss. The insurer will take care of the financial aspect of it, and you are left with a lighter load to bear in case of accidents or risks of loss.
Take, for instance, third-party car insurance. This one gives you peace of mind knowing that if your car damages other people’s property in an accident, you will not be liable for such damages. Your car insurer will instead be liable.
The same case applies to liability coverage in homeowners insurance. If someone sustains an injury under the roof of your injury, you will not be liable to pay. Instead, you will file a claim under liability coverage and get them paid for medical attention with regard to the injury sustained.
3. Certainty
Insurance coverage provides certainty from many perspectives. Take, for instance, a life insurance cover. With this type of cover, you are assured that you can access quality medical attention in case of health challenges. This type of insurance also provides you with the certainty of your family’s future lifestyle in case of your sudden death.
4. Economy’s well being
Having insurance coverage is not just beneficial to you as an individual. It is largely beneficial to the economy of your country/state of residence. When you have insurance coverage, you are directly or indirectly creating an employment opportunity for a person. There are many individuals employed in the insurance sector, directly or indirectly.
Furthermore, insurance companies ensure economic stability by indemnifying those that suffer losses due to instances of fire. These maintain their workforce, ensuring the unemployment rate is as low as possible.
