Insurance is a good way to help keep yourself out of financial difficulty. Basically insurance is a way to quantify unknown/unpredictable expenses. Insurance lets you pay for emergencies over time based on the statistical probability that an event will happen. If you are insuring against a very probable event (for example, the need to visit the doctor) you will pay a higher premium than for an improbably event (insuring against being hit by a comet).
Many people get into financial trouble with their credit cards after having a large unexpected expense as the result of some type of accident. Insurance can help minimize the financial impact of an accident and protect against catastrophic losses. For example, having car insurance will pay to repair your vehicle if you are in an accident. If your vehicle is worth $3,000 and you are in an accident that costs $1,500 to repair, your insurance could cover a large portion of the expense. For someone on a tight budget $1,500 in unexpected expenses can be very significant. This is where insurance helps, instead of paying the $1,500 all at once, you pay monthly or yearly premiums to cover the expense when an accident occurs.
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