What Is Insurance Used For?
Many times, insurance sellers don’t understand why others need to buy insurance;
Many times, people who buy insurance don’t know what effect buying insurance will have;
Today, let’s explain this problem in layman’s terms – what is insurance used for?
Guarantee
Leverage is the essence of insurance; it is also a type that cannot be replaced by any other financial instrument; for the poor, a small investment (after all, there are many types to choose from) will not be enough when encountering special situations such as illness and death. In times of serious risk, insurance can save lives. Even the last straw.
Even for the middle class, having money does not mean that they can withdraw large amounts of funds at any time to deal with emergencies; even if they can be withdrawn, it will affect the operation of other aspects to a certain extent. (Such as various types of investment and financing)
Protection
What we need for insurance protection is mainly reflected in two aspects:
①Protection of savings
Such as disease medical treatment. In addition to social security, there will be self-pay and self-pay parts that need to be shared through their savings. Result: consumption of savings. That’s what medical insurance is all about – loss compensation.
②Protect income
Here mainly to deal with larger risks, such as major illness and death.
★In addition to the necessary treatment costs, major illnesses
Can also lead to work interruptions, especially the long recovery period after major illnesses; no income may lead to the emergence of many family financial problems, because many expenditures are rigid and unavailable. Taihui will cancel due to interruption of income, such as living expenses, children’s education, parental support, mortgage, etc.
The benefit of critical illness insurance is reflected in this; if the insured amount can perfectly cover the loss of work during the period of income interruption, it would be perfect; but we must also remember: act according to our ability, pay attention to the protection period, insured amount and premium balance between.
★Death
For most people: the biggest manifestation of our existence as living beings in this society with a clear division of labor should be human capital; for the family, we are the mainstay and cash machine, and we need to rely on continuous work (including For financial investment decisions) to provide a steady stream of economic income for our families, then in this sense: we are a limited-term human capital.
If a man who has just become a father dies, unfortunately, it is not as simple as the death of one person. The family behind it (wife, children, parents, debts, etc.) will face various financial problems; if you use life insurance to cover your life, Capitalization can perfectly hedge the financial risks that arise when such risks occur.
Guarantee
Guarantees should also be divided into deterministic guarantees and uncertainty guarantees.
For example, at predictable time points such as children’s education and elderly care, corresponding expenses must be paid to cope with it. This is what I understand as a deterministic guarantee.
Uncertainty guarantee:
For unplanned events that may occur (for example, not everyone will choose to study abroad, not everyone will choose to start a business, and not everyone will have a marriage crisis in the future), there is nothing more significant than this in advance allocation, which is also a precautionary measure. the true meaning of. Of course, it also includes some special needs for using legal attributes to plan wealth ownership and inheritance direction.
All in all, these three meanings can exist independently or complement each other; it depends on how people with different wealth levels and cognitive abilities understand and use them.
Through this article, have you realized the significance of insurance?
Insurance Brokerage/Risk Management/Financial Consulting
Don’t flaunt or boast; talk about planning from a professional’s perspective and choose products from a consumer’s perspective.
