1. Can provide peace of mind. The most evident benefit of insurance is the peace of mind knowing that you or your property is protected from any unfortunate event that could happen in your life. For example, life insurance can protect your beneficiaries in the event of your death, an income protection insurance can provide you with benefits if you become unable to work, an auto insurance can protect your car in the event of automobile accidents, disasters, or theft, etc.
2. Short- term coverage. Another good thing about insurance is that you can adjust the length of coverage. You could choose a shorter duration for your short- term needs. For example, if you have present mortgage payments or loans and are planning to buy life insurance, you may only get coverage that lasts until those financial obligations are over. This means you can avoid overbuying.
3. Long- term coverage. On the other hand, depending on your unique situation, you might find yourself looking for longer, or even lifetime coverage. In some cases, this could be more cost- effective in the long run, compared to renewing short- term coverages regularly.
4. Tax- free money. Another benefit with insurances is that most of the time, the funds are tax- deferred. Meaning the benefits and any other earnings you may get under the policy is free of tax, unless in cases of employer- scheme insurances wherein benefits are treated as regular taxable income.
1. Can be expensive. A major fear of insurance buyers is the price they have to pay. Sometimes, depending on the policy and certain factors that affect the cost, such as credit score and other potential risks to the insurance company, buying insurance can be expensive. But if bought at a right time, with the right reason and right amount of coverage, you might actually get the right price.
2. Rising premiums. Most types of insurances have varying rates of premiums, and you should be very careful about it. Before buying a policy, make sure you know from the beginning if you have a guaranteed premium throughout the policy, or if it changes from time to time in relation to inflation. You should weigh out if you prefer a fixed premium or you’€™d like to take the risk, and more importantly, determine the amount you can afford to spare on the contract.
3. Claims might not be paid out. Sometimes, this issue also becomes a public misconception which drives insurance buyers away. While it’€™s true that there are cases of denied claims, there’€™s a ground for this to happen and thus shouldn’€™t scare you away. For one, you might have presented wrong information during the underlying process. Or you weren’€™t able to satisfy some requirements, or performed certain actions that could lead to nullification of your contract. To avoid this from happening, you need to be honest from the very beginning with your provider, and clarify any limitations or exclusions that could lead to denied claims.