Why Do We Need Insurance?
Insurance is an important part of financial planning. However, a small percentage of people just neglect it and think that insurance is a scam or liar as they never claim the insurance before. Oh please, you need thanks GOD for not giving you a chance to claim insurance. If you are giving a chance, it definitely not a good news. Insurance is bought for transferring your risk to insurance company.
To better understanding how insurance work, regardless of life insurance or general insurance please read the easy concept below.
Insurance company known as insurer sells policies to 100 people (insured). Each of them are require to pay RM100 as a premium to set up a fund with RM10,000 (money from 100 people). If anyone of insured is facing any damages or losses in the stated period, let say facing disability, money will be fold out from the set up fund to help the victim. If nothing happen to the insured in the stated period, money will not refund.
As you can see, we are transferring our risk to insurance company. If something unwanted happen, insurance company will take up the risk from us. We pay little bucks to buy a secure in our life.
For me, insurance is essential as I know I am not rich. If anything happen to me or to my asset, I won’t be able to fold out a large sum in a sudden as emergency always happen no mercy which might cost me a fortune. No joke, cost you a fortune.
No comment! No one interested in insurance product as part of financial planning?
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I think lots of people ignoring insurance.. not some.
Latest report, only 11m policies in-forced out of 27m population, not to mentioned some people like me having FEW policies.
Ignorance is the greatest enemy for financial success.
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Mrcoolku Reply:
May 1st, 2010 at 7:31 am
Just as Rich dad said, the greatest asset is knowledge. If you have financial knowledge, definitely you can retired earlier and peacefully.
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