What are the benefits of insurance and why does it exist?
Insurance exists to protect us from all of the “what-if’s” in our life. Without insurance coverage, our taxes would be higher and we would only own what we could afford with cash. The best benefits of insurance are that it makes it possible for us to own and operate businesses by providing coverage against the inevitable, such as natural disasters, economic fallout, and even simple accidents. Learn more about insurance coverage and find providers near you with our free tool below.
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
Licensed Insurance Agent
UPDATED: Dec 13, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Dec 13, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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Most of us think of insurance as a necessary evil at best. We rarely, if ever, see the benefits of purchasing insurance…other than making insurance companies and executives filthy rich.
For one reason or another, many people believe they shouldn’t have to buy it, or perhaps think it’s a waste of money, and probably wouldn’t buy it if it weren’t made mandatory by state law.
[Is car insurance required in every state?]
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. While paying for insurance is nothing but a pain to most people, there are a few reasons insurance helps society as a whole.
Believe it or not, we’d all have less money in our pockets if it weren’t for insurance.
Taxes Would Be Much Higher
First, insurance reduces the money we all have to pay for uncompensated victims of accidents.
Without insurance, many who are injured in an accident would become a drain on state and federal government agencies as a result of not being able to pay their medical bills..
In short, your taxes would increase in order to pay for rehabilitation or care of the sick and injured.
The reality is, we all pitch in a few dollars, in the form of insurance premiums, and let the insurer pay out the huge bodily injury and property damage costs that result from car accidents and other various liability and property damage that occurs on a daily basis in the U.S.
[Can insurance prevent bankruptcy?]
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Insurance Helps the Economy
The second benefit has to do with capitalism, or business pursuits. There would be 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.
Also consider the fact that the typical “slip-and-fall” liability claim would bankrupt the average small business owner as well. Whether it’s a legitimate insurance claim or not, very few small businesses could afford to write a check to a person with a broken back who sued them for slipping in their store.
[What is commercial general liability coverage?]
Insurance Makes the American Dream Possible
Perhaps the most important value of insurance to the average American 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 if you don’t intend to pay in cash. Without insurance to cover a bank’s financial interest as a lien holder on your loan, how would you convince the bank to lend you money in the first place?
Let’s face it; a bank would not lend you $200,000 to buy a home if they weren’t 100% certain the property would be rebuilt if it were destroyed. After all, would you continue to pay your mortgage if your home were destroyed by a tornado and not rebuilt using insurance money?
You don’t have to answer that…we already know millions of Americans don’t want to pay their mortgage if their home is worth less than they paid for it, let alone wiped off the face of the map!
[Is there tornado insurance?]
The World Economy Depends on Insurance
Finally, insurance plays a huge role in the world financial markets. Insurance companies invest our premium money 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.
Not to mention when the Japanese earthquake/tsunami hit, insurance companies responded by paying out billions of dollars in order to rebuild much of the destroyed property. Without insurance, Japan would have had to come up with that money out of thin air…with no manufacturing capabilities to rebuild much of the affected area.
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.
Compare Quotes From Top Companies and Save
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.