Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. It is either a financial tool or an expenses is depend on how you define it. Formally, it is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium.
There are lot of different type of insurances can be found in our society. What I want to say here is the life and medical insurance. Life and medical insurance is a personal financial tool that it is quite useful to every person. Why say so? It is because lot of things nowadays, they have factored in the insurance element into their price. If you do not have insurance coverage especially in medical line, you are more risky and costly than those who under life and medical insurance coverage.
I do not know what the condition in other country is, but in Malaysia, when a person has committed in an accident and sent to the hospital, hospital will need to get a deposit to start their action. They want to be sure they can receive the payment. Let imagine what if the person unconscious and hospital people cannot get a medical card in the person wallet? This happen to my friend experience before, luckily he is unconscious but at least he has medical card in his wallet.
Recently one of my friends has some sickness and she needs to have a surgery. Hospital needs to get the full payment before they conduct the surgery operation. It is an emergency surgical operation but hospital refuses any negotiation on the payment date. In this case, they have to collect the huge amount of money in a very short time for the operation. What will happen if they cannot get the huge amount of money in a short time? End up they borrow the cash from all the relatives and friends for emergency use.
Sometimes, you are rich, you have lot of properties or own huge company or have high pay, but accident come suddenly without notice and emergency means every second count can be different result, you cannot take out the cash means that time you are poor. You are poor of the ability to safe your life. Insurance can lower the exposure of the personal risk for the emergency use, just like the fire extinguisher in the kitchen. It is useless for cooking, but it is useful when accidentally caught fire. This is an example of risk management in financial world.
I admit there are lots of fraud cases in the society. Before you sign and agree to the policy, read and understand carefully or you get a good insurance agent who you can trust him or her on. Some times insurance also provide investment trust, insurer use your money you deposit for investing in the equity market. Insurance policy is almost same; the different is the person you choose to be your insurance agent.
How to choose and buy insurance? It is similar to invest in a stock market, do research and understand well before you act. When you buy, don’t have to put all eggs into the same basket. When you invest in profitable mutual fund or unit trust, you choose a right fund manager, to buy a good insurance; you also need to choose a good agent. This is why insurance is one of a personal financial tool.
There are lot of different type of insurances can be found in our society. What I want to say here is the life and medical insurance. Life and medical insurance is a personal financial tool that it is quite useful to every person. Why say so? It is because lot of things nowadays, they have factored in the insurance element into their price. If you do not have insurance coverage especially in medical line, you are more risky and costly than those who under life and medical insurance coverage.
I do not know what the condition in other country is, but in Malaysia, when a person has committed in an accident and sent to the hospital, hospital will need to get a deposit to start their action. They want to be sure they can receive the payment. Let imagine what if the person unconscious and hospital people cannot get a medical card in the person wallet? This happen to my friend experience before, luckily he is unconscious but at least he has medical card in his wallet.
Recently one of my friends has some sickness and she needs to have a surgery. Hospital needs to get the full payment before they conduct the surgery operation. It is an emergency surgical operation but hospital refuses any negotiation on the payment date. In this case, they have to collect the huge amount of money in a very short time for the operation. What will happen if they cannot get the huge amount of money in a short time? End up they borrow the cash from all the relatives and friends for emergency use.
Sometimes, you are rich, you have lot of properties or own huge company or have high pay, but accident come suddenly without notice and emergency means every second count can be different result, you cannot take out the cash means that time you are poor. You are poor of the ability to safe your life. Insurance can lower the exposure of the personal risk for the emergency use, just like the fire extinguisher in the kitchen. It is useless for cooking, but it is useful when accidentally caught fire. This is an example of risk management in financial world.
I admit there are lots of fraud cases in the society. Before you sign and agree to the policy, read and understand carefully or you get a good insurance agent who you can trust him or her on. Some times insurance also provide investment trust, insurer use your money you deposit for investing in the equity market. Insurance policy is almost same; the different is the person you choose to be your insurance agent.
How to choose and buy insurance? It is similar to invest in a stock market, do research and understand well before you act. When you buy, don’t have to put all eggs into the same basket. When you invest in profitable mutual fund or unit trust, you choose a right fund manager, to buy a good insurance; you also need to choose a good agent. This is why insurance is one of a personal financial tool.
1 comment:
Insurance has been a financial tool for risk management for many many decades now. Insurance will continue to be in demand as it is the cheapest form of 'Emergency Fund'. The insurance industry has evolved to include many different types of policies that suit different people. There is no one insurance policy that is better than another one. It is how the advisor can help you tailor-make the best insurance program that suits your age, needs, commitment & budget. Consumers these days are smart & many information are readily available on the internet. Do read & get some basic info on insurance, but if you need a quick & simple explanation, a trusted insurance advisor will save you all the hassle.
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