What Are the Benefits of Insurance?

Most of us think of insurance as a necessary evil at best. We rarely, if ever, see the benefits of purchasing insurance.

Many people don’t think they should have to buy it, or maybe think it’s a waste of money, and probably wouldn’t buy it if it weren’t made mandatory by state law.

But the reality is, without insurance, much of the financial world as we know it would grind to a screeching halt, and we would only own the things we could afford to buy in cash…if there were even companies around to pay us a salary or sell us anything.

We need only to look at some of the basics of how insurance adds to our society to understand its value.

First, insurance reduces the money we all have to pay for uncompensated victims of accidents. Without insurance, many who were injured in an accident would become a drain on state and federal government agencies.

In short, your taxes would increase in order to pay for rehabilitation or care of the sick and injured.

The second benefit has to do with capitalism, or business pursuits. There would be many fewer businesses in America if there were no companies to insure them.

Ask yourself this; how would any business be able to survive if it suffered from a loss? If a tornado struck your town and destroyed much of the property, how would the affected companies reopen?

Unless they had enough cash in the bank to completely rebuild their premises and manufacturing equipment, they would be bankrupt immediately.

By the way, what if the bank was destroyed? Where would their cash be? Who would pay for the restoration of the credit system at the bank? This is all covered by insurance.

But perhaps most important to us is the fact that insurance indirectly provides us with credit to purchase items we deem necessary for what we consider a normal life.

You need an insurance policy to purchase a new car or a home. Without insurance to cover a bank’s financial interest as a lien holder in your loan, how would you convince the bank to lend you money in the first place?

Another benefit to us as individuals is mandatory liability auto insurance. If someone ran into your car and caused you bodily injury, how would you pay for the medical bills without insurance?

Or if someone got injured on your property, how would you pay for the damages?

Finally, insurance plays a huge role in the world financial markets. You need only understand how insurance companies make money.

They invest our premium in start-up companies as well as many forms of government bonds, which allow the upkeep and building of our country’s infrastructure.

Again, this saves us all from paying huge tax bills. If insurers didn’t buy these bonds, we would have to settle for poor roads and bridges, or foot the bill ourselves via higher taxes.

At the end of the day, insurance is one of the best social devices ever conceived of. Without it, we would not be able to enjoy the quality of life afforded to us in the United States.

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This post was written by The Truth Team on March 12, 2010 Comments (0)