Why you need insurance to be part of your life

Doreen Kambanganji-Silungwe

INSURANCE is all about providing a financial safety net that helps you to take care of yourself, your loved ones and assets that you value. Risk management is very important at both individual and business levels. In life, we are assured of encountering certain risks and it is, therefore, important that we plan for some of the risks that we may encounter. This helps us manage the financial costs that are associated with such risks.

Let us put some of the unforeseen circumstances that may befall us into perspective. How do you deal with medical bills when you or one of your family members falls ill?

Have you planned for children’s education? Would they be able to continue with the same kind of education if you were no more? How about the house(s) you have built? How about other assets? Are they insured? What would happen if they were gutted by fire? Yes, this does not happen every day but it can happen and does happen. What would you do? What about your business, is it insured? Business risks include fires, floods, burglary, etc. and lack of cover has forced some businesses to close down due to losses caused by some of these hazards.  

Now I am not saying that having an insurance cover in place will prevent misfortunes, but it will definitely soften the blow. For example, in the case of a shop, the business will only be closed temporarily rather than permanently, as you will be compensated by your insurer.

Ensuring you are covered if the worst should happen is therefore in your best interest as it helps you to deal with or recover with life’s mishaps. Below are some reasons why you need insurance.

Peace of Mind

No amount of money can replace your health, well-being or your presence in your family. But you can at least have peace of mind knowing that if anything happens to you, your family’s financial security is assisted by insurance.

The same would apply to your business. If you have a shop and insured the stock, you will have peace of mind knowing that even if thieves break into your shop, you will be compensated by your insurer.

Reduce Stress During Difficult Times

None of us know when we will find ourselves in difficult situations. Unforeseen events such as accidents, drought, illness, injury or permanent disability, even death, can leave you and your family facing emotional stress.

With insurance in place, stress caused by financial worries will be reduced and you can focus on recovery and rebuilding your lives.

Provide Safety and Financial Security

Insurance provides financial support and reduces uncertainties at individual and business level. It provides safety and security against unfortunate events.

Insurance provides a cover against any sudden loss. For example, if your house is gutted by fire, you will not have to dip into your savings (that is if you even have sufficient savings) to reconstruct the house. The insurance company will take up this burden.

A Legacy to Leave Behind

A lump sum death benefit can secure the financial future for your children and protect their standard of living. For example, you want your children to continue their education even when you are gone. We have heard stories where children have dropped out of school when a parent dies. Insurance can help to prevent this from happening.

Long-Term Insurance is an Alternative Way of Saving

Insurance does not only protect you against risks and uncertainties, but can also be used as a long-term saving plan. Long-term insurance enables systematic savings in form of regular premium payments.

It helps individuals develop a habit of saving money by paying a regular premium and at the maturity of the policy, the insured gets a higher lump sum amount.

Finally, insurance is an essential part of any sound financial plan. Having the right insurance policy will help you protect what you value and keep you from depleting your savings.

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The author is Communications Manager at Pensions and Insurance Authority.