What is Insurance?
In life, a lot of unexpected circumstances always happen, sometimes in the twinkle of an eye, which is enough to change the life of an individual forever. These events could be positive or negative events. In the case, that these events do not change a person’s life forever, they at least change a person’s life for a period of time. This has led to the phrase hope for the best while you plan for the worst. This is due to the fact that negative effects could get much worse if proper preparations are not put in place. In over 90 per cent of the cases, this preparation has to do with funds to take care of the emergency.
For example, imagine an individual, involved in a ghastly motor accident and needs an urgent operation. The hospital however insists for a minimum deposit before the individual could be operated. Due to lack of preparation however, the individual does not have the right amount. He could die from the delay of trying to source for funds. This led to the creation of insurance where you can, in advance, transfer the risk of a loss to an insurance organization in exchange for money referred to as premium. Whenever any of such negative events comes up, the insurance company takes care of all the expenses of the insured. Insurance is thus a very important risk management strategy that is very effective.