If you read any guide to sound financial management, you will find references to the need for insurance. This can, sometimes, be confusing: after all, you’re spending money on an event that you hope won’t happen, which can often seem difficult to justify if your budget is already strained.
Insurance, however, is an incredibly vital part of your overall financial strategy – and here’s why:
Insurance protects your savings
If your house suffers storm damage, and you do not have building insurance, then you will have to fund the necessary repair work yourself. This can be extremely expensive and substantially depletes your savings as a result – potentially even reducing them to zero. Insurance ensures this situation never occurs, which means you can build your savings consistently without having to worry about needing to withdraw from them to cover an expensive unfortunate event.
Insurance helps to protect against debt
The above scenario assumes that you have the funds to cover the costs of repair work via your savings. However, in the worst case scenario, you could find yourself needing to pay for essential repairs but not having enough in savings to cover the cost. For most people, this leaves only one alternative: debt. Insurance helps to ensure this is never necessary, and that you will be able to fund repair work, meet medical expenses, and more besides.
Insurance products can protect the future finances of your family
With products such as life insurance, you can be sure that your family will be financially secure whatever the future brings. This is beneficial on a practical level, but also an emotional one, providing an extra level of security and reassurance. If you don’t already have life insurance, there’s a handy guide in the infographic below:
Infographic Design By Do I need life insurance