What Is Insurance and Do You Really Need It?

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We all end up with some sort of insurance at some point in out our lives but what is insurance and do we really need it at all?

The truth is that it is easy to think that we only need to take out a policy when we are forced to do so in order to buy a house or take a car onto the road.

Having said that, the importance of insurance is such that it pays to think about it even though it might not be the most exciting subject in the world.

What Is Insurance Anyway?

It is easy to pay lots of money in insurance premiums over your lifetime without ever even stopping to think, “What is insurance anyway?”

This YouTube video will help you understand the subject but isn’t as difficult you might think.

Insurance has a long and interesting history. Actually, it´s not that interesting but it is long. It basically involves people pooling together money to cover any of them in the event of being affected by one of the risks they want to avoid.

In the past this could have been cargo ship owners pooling their money to make sure that none of these lost out too heavily in the event of a bad storm or, you know, pirates and stuff.

If you want to know more about the history of insurance then this interesting video will help.

These days most of us don´t have to worry about pirates but we do worry about our property being damaged or our income being affected.

To deal with this we pay a premium, just as the other people who are worried about the same things do. Anyone who suffers the problems they had feared gets paid out from the fund of money that is built up in this way.

The Importance of Insurance in the Worst Case Scenarios

Ok, so you don´t want to think about what would happen if you passed away or suffered away. Heck, even thinking about the possibility of breaking a nail or drinking some coffee that is slightly too hot is something you would rather avoid.

However, if you don´t spend just a few minutes considering the types of risks you could come across then it could be worse in the long run.

All it really takes is for you to picture what your family would do if something happened to you. Would they need extra monthly income or a lump sum to help them cope?

There are many different types of personal insurance around, with each one designed to cover specific types of risks you could run into. The next video shows us some of the main types to consider.

The Types of Risks and Insurance Most Important to You

You can take out as many different types of insurance as you like. Clearly, the most insurance you have the more peace of mind you would expect to have as a result.

Having said that, the cost of having a lot of different policies could hold you back from taking out too many policies.

Bearing this in mind, what you should do is work out the things that matter enough to you to pay for them. You can´t expect to insure against every single bad thing that could happen but you can cover yourself for the things you most fear.

For example, if losing your job and regular income is your biggest worry then you could look at the main unemployment insurance benefits. In the same way, if you are concerned about your family coping with life after you pass away then some form of life insurance would be your best option.

Just as you would look at the unemployment insurance benefits in detail, you should find out the top benefits of any type of cover you consider taking out. You can then work out the cost and see what you can afford.

This video will help you get an idea of how many type of personal insurance plans are around right now.

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