Insurance : What if something goes wrong?


Insurance – Life or General is largely about answering some questions like “What if….goes wrong”?

The fundamental objective of insurance is to provide a means to offset the burden of financial loss. Think of insurance as a premium paid for “transfer of risk” premium. An alternative method of dealing with risk. You are paying an insurance premium (small cost) to avoid paying the total cost for a catastrophic loss (such as your house burning down). So it is fairly obvious that you will not insure your mobile phone (you can afford to carry the risk on your own self) but will insure your house (the burden of this risk is too heavy to carry). So the house risk you transfer, by paying a premium. Mobile loss risk you keep on your own self. As simple as that.

A sound insurance program should answer the “what ifs” in your life. For example:

What if you were faced with a major medical expense? (health & illness insurance)

What happens if you were unable to work for a long period of time due to a severe illness or accident? (disability insurance and/ or critical illness insurance)

What if your most important employee dropped dead? (Keyman Insurance)

What if a fire destroyed many of your personal possessions? (home owner’s insurance)

What if an employee stole data from your company (D&O insurance)

What if you were involved in an automobile accident? (auto insurance)

What if you were to die tomorrow? Who will protect your income flow? (life insurance)

So if there are some more “What if” kind of questions….just see whether the risk can be measured. If it can be measured, it can be transferred. Transfer costs money (premium) and the benefits are – the insurer will pay all genuine claims. That is all.

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One Comment on “Insurance : What if something goes wrong?”


  1. I’m a good example of someone that play the odds and lost so much. I have been playing with the idea of dropping my car insurance to save money. It is a odder car so that I owe nothing on it. However, it is custom and I spent over 30 thousand into it. The other day I got hit on the side and it caused over 10 thousand dollars worth of damage. So, yes it pay to have insurance.


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