In simple terms, Insurance is planning for uncertainties. We normally plan for certainties of life and ignore uncertainties and unfortunate events. Â Insurance is one of the most important financial topics in today complex world. Failure to have adequate insurance coverage is like putting oneself for financial burden. Insurance is nothing but transfer of potential risk to insurance company at a cost. Nothing will make your business, car, house, family, or self-more vulnerable or susceptible to financial strain than a lack of adequate insurance. However, paying too much for insurance premium can be a financial strain in itself. Hence insurance should be looked at purely as expenses and premium is paid for risk and not for getting any returns or any maturity benefit. It should benefit you or your family in case of any uncertain events.

Many people have a preconceived notion that insurance is just a waste of money, something that is not necessary. This is not true. Almost everyone needs insurance. How do you know? If you own anything that cannot be easily replaced without economic hardship, it should be insured. If your house catches fire, what would you do? If you became disabled at work, would there still be food on the table? Or, in the worst case, would your family be able to maintain the standard of living in your absence? Will your income continue?

These are tough scenarios to imagine, but they happen every day. It is important to understand the consequences and to be prepared for the worst. Some people tend to think of insurance as a luxury, but this is not true at all. Insurance is simply a way to avoid an impoverished state.
Like many things in life, the decision to purchase insurance or not is based on a system of risk/reward. Unfortunately, consumers often look at the reward and ignore the risk altogether. This can impede the process of making an educated decision. Hopefully, you now realize that insurance is a necessary part of today world.