Shocking it may sound but some people quite misunderstand what insurance is about. I have been approached numerous times for help with insurance when it was too late. These people mistook insurance as some kind of philanthropic source of cash to apply for when in need. Though related to human suffering, it’s not about charity: it is a rational, money making business. With almost anything else, one can postpone buying until there is a need for use; with insurance, buying is not an option then: you can apply and pay for it only in advance.
Any kind of insurance is basically a risk-sharing arrangement among a large number of people who would be much more financially vulnerable without the insurance industry organizing this. Long gone are the days when closely knit large families and small communities of people were to help those stricken by injury, sickness, or the loss of the breadwinner because of death. These kinds of help, together with assistance from the government and society at large can be life saving, but probably cannot provide a life-style even remotely comparable to the one that is realistically achievable to the great majority of people through insurance.
All the above is not to say, of course, that insurance is the only way of managing risks in our life, or even that it would be the most important part of it. Being cautious, avoiding dangers, leading a healthy way of life are fundamental, since no money can bring back or really substitute life or health lost. Any sensible person takes precautions, but to varying degrees we cannot avoid risks, or even do not want to give up certain things that are risky. Since all these unavoidable and/or voluntarily taken risks have financial consequences, one has to be equipped with proper financial tools as well. Insurance is the best tool for such purposes.
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