What are the benefits of insurance?

A simple way to stay on the safe side is to have insurance coverage. Insurance serves as a backup plan for unprecedented problems. Your financial plan can be at risk of collapse in a matter of days if proper insurance isn't put in place.

What are the benefits of insurance?
Photo by J W on Unsplash

Imagine a guy named Albert who just purchased an expensive car. After about two weeks, while going on a regular drive, he spotted the new exquisite restaurant at the end of the street; so, he got carried away while admiring the magnificent building. And by the time his attention could get back on the road, he is already trying to avoid hitting a food van packed just beside the road and instead hits a road sign.

Unfortunately for Albert, he sustained a neck and a back injury, and he still has to fix a damaged car. That's a lot of expenses going Albert's way already.

Here's the thing, if Albert had invested in health insurance and vehicle insurance, he wouldn't worry too much about the situation. But, sadly, he has no insurance coverage in place for situations like this. Road disasters and other unforeseen circumstances are unpredictable and can take you completely unawares. Just like poor Albert, anyone can be faced with similar situations. This is why you need an insurance cover.

Insurance is a means of protection from financial loss. It is one of the most common forms of risk management; it is mainly used to shield against the risk of a contingent or uncertain loss.

A simple way to stay on the safe side is to have insurance cover.  Insurance serves as a backup plan for unprecedented problems. For example, if Albert had insured his vehicle, he certainly would not be paying for the damages, as such expenses would be covered by the insurance company.

You can get insurance for almost every situation you get into today as an individual or a business owner. The most common forms of insurance include life insurance, health insurance, vehicle insurance, and property insurance. Furthermore, there is also pet insurance, renters' insurance, flood insurance and many more.

We will cover various forms of insurance in details in a future blog post. Make sure you subscribe to get new posts directly in your mailbox.

So, why should you get insurance? For starters, you won't want to be in a similar situation as Albert, would you? Certainly not, so that's quite a significant reason why you should get insurance.

Let's go through other reasons why you might need insurance:

Benefits of insurance

Insurance can help to be financially stable

Having your savings and incomes planned can be an excellent step to self-sustenance. However, your financial plan can be at risk of collapse in a matter of days if proper insurance isn't put in place.

For instance, fire outbreaks don't come knocking on your door and waiting for you to answer; neither do chronic health challenges that may require a lot of money to treat. These situations are mainly uncertainties: they could hit when you least expect. As a result, having insurance coverage can always keep your savings and recurring income safeguarded.

Unpredictable situations can take you off balance, and while it would mainly require money to put off, your emotional and physical state can often be the victim of the situation. Insurance makes you think less about the monetary aspect of the problem and focus more on the recovery phase.

Say, for example, if someone traveling on a commercial vehicle suddenly gets involved in an auto crash and, in the process, ruptures his spleen or sustain injuries to his ribs. Adequate health insurance would help him to focus on resting and recovering faster rather than worrying about the funds to pay for his medical bills.

In contrast, a person without proper health insurance or no insurance would have to think of the amount it would take to get appropriate medical attention, ultimately making the victim mentally and physically stressed.

Coverage for business damages

While getting insurance to cover your home and health challenges is essential, insurance plays a significant role in the business premise too. For instance, liability claims could cost businesses a lot of money without proper insurance coverage.

Business insurance also covers costs against property damage. To this end, business owners do not need to spend from their pocket to cater for damaged properties or claims against the business when they have insurance in place.

Employee protection

Aside from covering the cost of damaged business properties and liability claims, some forms of insurance provide protection for a company's employees well-being.

Insurance plans like workers' compensation provide benefits to workers who sustain injuries or become disabled while rendering services to their employer.


A life without insurance is one lived with fear and uncertainty. Insurance provides the necessary backup you need when faced with life-threatening situations. Aside from damaged cars, injuries, loss of lives, and damaged properties, insurance can also cover you in the event of natural disasters like floods, earthquakes, hurricanes, etc.


How does insurance work?

When it comes to how insurance works, there are two parties, the insurer and the insured. The insurer guarantees payment benefits to the insurer against uncertain future events, and in return for this protection, the insured pays a lesser amount known as a premium.

What happens if I miss an insurance premium payment?

Insurance work in a different way as against most agreements. To this end, most insurance policies provide a 31 days grace period after the agreed payment date. Usually, paying a premium may come in late on the insured, so a grace period is added to provide more time.

And what if I also miss the grace period?

Usually, the policy is cancelled or terminated, as the case may be.

Do I need life insurance?

This could be dependent on few cases. First, you have a family who depends on you for financial benefits, then getting life insurance is necessary. Also, if someone aside from your immediate family relies on your financial support, you may need to get life insurance.

Life insurance caters for your dependents and family after your death. This includes income replacement, burial expenses, mortgage backing, living expenses and more.

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