What is Insurance ?
Put simply, “Insurance” is the payment of a small predictable amount of money (“premium”) to protect against a larger unpredictable expense (“loss/claim”). This transfers the risk from you to the insurance company for a fee.
Why do we need insurance ?
Only one answer – Peace of mind. Many of us have never had to make an insurance claim. Therefore, when we continue to write the check month after month, we feel as if we are pouring money right down the drain. Even though you have never had to make a claim on your insurance, there is a good reason that it is there. Naturally, insurance is there to protect you and your investments.