Why Do We Need Insurance?

Why is it important to have insurance?

People need insurance for a number of reasons, but the main reason we need insurance can be summed in in one word: Protection. Insurance offers people the ability to protect themselves in the event something unexpected happens. Depending on the type of insurance, the protection offered can either cover certain expenses incurred by the insured or expenses incurred by others as a result of their actions. The specific benefits and coverage provided depends on the type of insurance being provided.

This article explains the basics of why we need auto insurance, life insurance, and disability insurance.

Why We Need Life Insurance

Life insurance is basically set up as a way to protect the loved ones of someone who has passed away. This insurance is typically used to cover the breadwinner or breadwinners of the family. This type of insurance is typically needed so that the surviving members of a family will be able to continue living the life that was provided for them prior to the death of their family member. Without life insurance, an unwanted burden could be put on the surviving spouse or children to cover expenses that they are not normally accustomed to.

In addition to a normal life insurance policy, there is also what is known as credit life insurance. This type of life insurance is typically included on loans that have been taken out, such as car loans and mortgages. This insurance specifically covers the loan and will pay off the balance of the loan in the event the responsible party passes away. There is a great need for this type of insurance, as without it the surviving members of the family could become responsible for the debt. Another problem with not having this type of insurance is that these loans may then have to be paid out of the estate or existing insurance policy, which will decrease the amount the surviving members will be entitled to.

Typically, there are two forms of life insurance, which are term and whole life. Term insurance is only good for a certain amount of time before it will expire and a new policy will need to be obtained. Whole life policies typically run until the person passes away or they trade the policy in for its cash value. It also enables the insured to take out loans on the policy based on the amount that they have paid into it. Pricing on life insurance varies depending on a number of factors. The main factors that will effect the pricing of life insurance include a persons age, occupation, and medical history as well as the amount of insurance requested.

Why We Need Disability Insurance

This type of insurance offers protection in the event that someone gets hurt or ill and is no longer able to work for a specific amount of time. This type of insurance is needed not only to provide income to a party in the event they are not able to work, but is also essential in helping the insured cover medical expenses related to their illness or injury. Costs for this type of insurance are typically higher than most other insurances, especially if the insured has to pay for the coverage on their own. It is typical that the employer of the insured will cover a portion or all of the costs of this type of insurance, making the premium much more affordable as it will be based on a group rate rather than just an individual policy.

Why We Need Auto Insurance

This is an insurance that is not only needed to cover someone in the event of an accident, but is typically required by law. There are two general types of insurance coverage, which are liability and comprehensive coverage. Liability insurance will provide bodily injury coverage, either per person or per accident, and property damage coverage. This insurance is needed because without it any expenses related to the victim of an accident, including damage to their car, that has been caused by the driver of a vehicle will then have to be paid out of pocket by the driver. Comprehensive coverage, also known as collision insurance, covers the cost of repairing your own vehicle. Since car repairs are often quite expensive, many people would not be able to afford to have their vehicles repaired without this type of policy. Pricing for any auto insurance policy depends on a number of things, including the age of the insured, their location, their previous driving record, and the type of car being insured.