Insurance – when things go wrong….

 

Just because one is angry with an insurance company, one cannot decide to live without insurance. Not just life – health, car, event…….it is an essential tool of business. Here are some reasons why you need insurance.

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 (small amount of money) for “transfer of risk” premium. This small amount ensures that you do not have to bear a big loss (much bigger than the premium paid). 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? (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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2 Responses to “Insurance – when things go wrong….”

  1. Observation:
    D&O will protect management liability to third parties (shareholders). Employee theft of tangibles (cash/property) is covered under Fidelity/Crime Insurance and intangibles (data) under Cyber Security.

  2. This is one of the most informative articles published on internet on Insurance. It is handy to know the doubts and information beforehand to make an insurance policy productive. Thank you again.

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