What is insurance?

There is such an enormous lack of understanding about insurance, how it works and who it benefits.

It’s worth spending a moment to understand what it is.

I found a nice quote on Wiki pedia that said that insurance “is something people buy to protect themselves from losing money”. It went on to say that consumers “who buy insurance pay a premium (often paid every month) and promise to be careful”. In exchange for this, Wikipedia explains, “if something bad happens to the person or thing that is insured, the company that sold the insurance will pay the money back. However, there are some times when the company will not have to pay the money back, such as if the person was not careful.”

These policies can cover a wide range of things, including property such as our house and belongings, our vehicles and even the vehicles belonging to other people that might be damaged when there’s a disaster. They can also cover our lives and those of our loved ones and even our health. It can cover the health of our employees and the people who visit our offices. In all of these cases, if something bad happens that costs money, the insurance company will pay the costs instead of the policyholder.

However, it’s very important to carefully read any policy you consider and make sure you understand exactly how it works. For instance some vehicle insurance policies don’t cover you if you are charged and convicted or you admit guilt following an incident. Most life insurance policies won’t cover you if you engage in dangerous sports or activities.

The commonest argument I hear against having insurance is that it’s expensive. Well, firstly, it’s NOT that expensive and it’s sometimes a LOT cheaper than NOT having it.