Do We All Need Insurance? And Can We Live Without It?

shaking client's hand

You may have already heard that insurance is something we cannot live without. There are even hundreds of types of insurance out there. There are insurance policies for things like our cars, our homes, our health, whenever we travel, and there is even insurance for the little things like parcel delivery.

What is insurance, and why won’t everybody stop talking about its necessity in life?

Insurance in a nutshell

Insurance is something that helps protect yourself or your belongings against several risks present. It also helps pay for any fees or charges that may arise should you get ill or get into an accident. And for an insurance company to help bail you out of a sticky financial situation, you will need to invest your money in them at a time period of your choosing.

This could be anywhere from a monthly, quarterly, bi-annually, or annual basis. And your insurance plan will vary depending on your needs. To put it short, you are investing cash in another company or entity to help you out with your finances should you need it in the future.

In what situations would we need insurance?

Closeup of a car key on an auto insurance policy

If it is possible, it is better to have insurance on everything we have and will do. The risk will always be there, and we cannot really tell when and where it will happen. For example, if you own a car, then your car insurance will take care of many things should anything terrible happen to it like a car crash.

Should you get into a car crash in the future, your insurance policy will most likely take care of things like the repair or restoration of your car – sparing you an expensive financial draw from your wallet. We cannot really tell when we get into such situations. And even if we do our best to be careful, we cannot vouch for the actions of others.

We can even use insurance for when we need to send parcels or packages. While most shipping or forwarding companies follow strict rules and guidelines and use top-of-the-line loading and unloading systems like an air cargo trailer to ensure that nothing goes wrong in their operations, there is still the off chance that a few packages go missing or get sent to the wrong address.

And when those packages go missing, your insurance will help cover for the losses that have occurred. The insurance will more-or-less match the value of your losses and pay you for your trouble. This is what insurance can do.

Is it for everyone?

Yes. However, while the idea of having insurance for every scenario is comforting, we cannot have it all. The cost of having such a policy would be monumental, to say the least. You need to pick your insurance policies carefully according to your threat model.

But to keep things simple, you will need the basics such as health insurance, car insurance, home insurance, and life insurance. These policies will more or less cover you for all of your everyday activities and situations.

Do we need insurance? Absolutely. However, we cannot possibly get every kind of insurance imaginable as the costs would be too great. But if you have the means to cover yourself, then you should definitely do so. The peace of mind it will give you will most definitely worth the cost.