Insurance is an arrangement made by the government or company agency to provide a guarantee of compensation for specified loss, illness, damage or death in return for the payment of a premium.
There are various types of insurance. These include health, disability, life, pet, floods or even car insurance.
Pros of Insurance
- There is compensation
In case of anything happening the member will be compensated for the loss. The member is required to have been paying a certain amount of money in order for him or her to be compensated over the loss that might have occurred.
- Has predictable premiums
Any type of insurance has a different premium for its members to pay each month. This may make it easier for someone to plan on how he or she is going to make the payments each and every month. It does not come as a surprise hence easy for someone to plan.
- It may act as an asset
The amount of money paid by the member may act as an asset to the member because the member will be assured that in case of anything then he has some money that is saved somewhere that he or she can use.
- It may pay dividends
Depending on the type of insurance cover someone is having, it may pay some dividends hence making the person earn some profit on the money that is put somewhere. On top of that, the owner is still in a position to be compensated in case of any eventuality.
- Creates employment opportunities
This is created by the companies that are offering the services as they may need various people to handle various departments in the company hence employment opportunities.
- Sharing of risks
When someone goes for insurance, he or she shares the risks hence in case of something happening then the person will be assisted by whom he shared the risk.
Cons of Insurance
- Takes a long time for compensation
Depending on the type of insurance, the company or government may take a long time for the compensation to come over. This may really disorganize the beneficiary hence making a lot of people not to go for insurance. The legal formalities that are involved before compensation may be tiresome.
- It may provide little financial facilities
Depending on the type of loss that has occurred, the company may provide little finances that may not be able to cover up for the loss of that might have occurred.
- It does not compensate for all types of losses
The company may be specific with the type of loss to be compensated hence making the beneficiary suffer loss in case he or she experiences a different loss.
- High premiums
Sometimes a company may have high premiums but the amount of money that may be compensated in case of the loss occurs may be little.
- May lead to crimes in society
When the beneficiary knows that he or she has paid a lot of money, may decide to commit a crime so that he or she can be compensated for the loss.
Insurance is good as someone may live a confident life not fearing because he or she will be well prepared for anything that may occur along his or her way.