What Is Insurance & Why It Is Important?

Insurance is a form of risk management in which the insured transfers the cost of potential loss to another entity (insurance company) in exchange for monetary compensation known as the premium.

Insurance allows individuals, businesses and other entities to protect themselves against significant potential losses and financial hardship at a reasonably affordable rate. The risk is uncertainty and may occur at any time, any place, at any entities without significant indication. Therefore, we need to be prepared by taking proactive actions transferring the risk to the third party (insurance company) in order to continue our survivals. Everyone that wants to protect themselves or someone else against financial hardship should consider insurance.

This may include:

• Protecting family after one’s death from loss of income
• Safeguarding debt repayment after death/total permanent disability
• Covering contingent liabilities
• Protecting against the death of employee
• Buying out a partner or co-shareholder after his or her death
• Protecting your business from business interruption and loss of income
• Protecting yourself against unforeseeable health expenses
• Protecting your home/building/ physical assets against theft, fire, flood and other hazards
• Protecting yourself against lawsuits
• Protecting yourself in the event of disability
• Protecting your vehicles against theft or losses incurred because of accidents