Most of the folks that I know, do not believe nor include insurance as part of their budget of expenses. To most, insurance is really an "expense" that they could forgo.
So what is insurance and why do we need it?
Insurance, in law and economics, is a form of risk management primarily used to hedge risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. against the Source- http://en.wikipedia.org/wiki/Insurance
Ok, in Layman's terms, insurance is an instrument whereby one pays a premium to insure, for example, his automobile, that would pay for any losses he might incur in case an accident may happen. “Insurance provides indemnification against loss or liability from specified events and circumstances that may occur or be discovered during a specified period. ”
Now most people understand this concept and still believes that insurance is just an expense that they can do without. I remember during my early years in dealing with non-life insurance, I had a friend who had a vehicle and offered him comprehensive insurance (in the philippines, this means full coverage that includes own damage and loss/theft.) since his coverage was only CTPL (compulsory third party liability, again in the philippines this is a requirement prior to registration of motor vehicles and is quite cheap.) During the year, the vehicle met an accident luckily he did not hit any person he just hit a lamp post and got away with just a bruise on his pride. He thanked me for the additional coverage since the insurance took care of repairing his vehicle at a very minor cost to him.
Another incident involving motor vehicle accidents was when my son's godfather called me up and said he accidentally hit a drunk person crossing the street. The fellow died and left my friend in shock. The insurance took care of the of the burial costs. And other expenses my friend would have coughed up had he not taken the additional coverage.
Considering insurance as an expense may not seem fair since insurance not only would help a person in their time of need, it also helps them have the peace of mind that they deserve.
Should any of you be interested, I offer non-life insurance with a product line consisting of motor car insurance, Fire Insurance, Marine Cargo Insurance, Personal Accidents.
I am currently connected with Toko Marine Malayan Insurance Corp.
