Personal finance is a concept that is increasingly gaining grounds in the present times. People all over the world realise how important it is to manage and keep their money safe and growing.
The meaning of personal finance highlights the utilisation of money that will secure the person’s present and his future as well.
It is an umbrella term that covers concepts like;
- Budgeting and saving the money that is earned every month.
- Trying to make money grow through investments in gold, property and even shares.
- Planning the future until your last breath, with particular emphasis on life after retirement.
- And finally securing oneself from any emergency that the uncertain future is likely to bring through insurance
The aspect I would be covering today is insurance and why paying the £500 to £2000 premium every month is as justified as it is crucial.
We are continually wearing facial masks and gloves when we venture out for groceries and essentials in the pandemic. Is that right? We do this because we want to protect ourselves from catching the virus.
The same is the case with insurance; it acts as a mask and gloves, to protect us from all forms of financial losses.
In simple terms, insurance is the protective wall for our money, when a financial calamity sets out to drain it. The wall will only be healthy when a price is paid by you to secure it.
Then the insurance company bears all the damages and losses that we have been paying a premium every month.
Since the world, we live with unpredictability at the best, so being prepared through insurance is the wisest choice you make ever make.
I say this because through insurance, even if you die, your family would have a financial haven after you. Although it would never substitute your presence, the money will keep them afloat enough to have the required time to grieve you and your absence.
If we look at the insurance formation, you will find one for every category there is.
- Life Insurance; this one is bittersweet. A life insurance provides your family the financial means to go on without you. This one covers the cost after a person dies; hence it is called life insurance.
- Health Insurance; this one will help you deal with the financial repercussions of a health problem.
- Home Insurance; this one protects your home. From thefts and fires, it covers all uncertainties.
- Business Insurance; a business has numerous assets that it needs to protect. For example, a consignment being transported London Belgium was stolen en route; the business owner would have to face huge losses if the consignment was not secured.
- Insurance for Valuables; this includes all the rest of the things that can be insured. From vehicles to jewellery to mobile phones, a loss or damage will be covered by insurance.
David Beckham, a legendary English footballer, had insured his legs because they were what helped him to make his career.
How do you benefit from Insurance?
Insurance has a number of benefits that have transcended his principal purpose.
- Guarantees you can Tackle Uncertainties
Insurance helps you to focus on things that need to be prioritised in difficult times, without having to worry about money.
Imagine someone close to you got severely injured in a car crash. Not only did his brand new £50,000 car gets totalled, he also had to go through multiple surgeries and months in recovery to get back to his usual self.
You tell me if this person did not have insurance, would he have been able to go through all of that with only one priority? I do not think so.
- Get Loans on it
If you have insurance, you would need to ask for long term loans for bad credit with no guarantor. It is because the insurance will act as your guarantor.
Life insurance or home insurance is often for a substantial amount, so getting a loan against it is easy enough. You would never need a guarantor or collateral. From banks to direct lenders, everyone would willingly give you financial aid.
- Acts as an Investment
This one is more focused on one category of insurance, which in my opinion, is the most important, that is life insurance.
Life insurance has two end clauses;
- One is when you die, and then your family will receive a lump sum of the insurance money, despite how many instalments you have paid. You can also ask the insurance company to pay more, and they might because you cannot put a price to human life.
- Next scenario is at the maturity of life insurance. You might have taken it up for 30 years, and those thirty years are up, and you are still healthy and fine. Because you paid the entire premium, so the amount that was to be received at your death, you can get the same at maturity and enjoy the rest of your life in financial bliss.
I do hope that the question I put in the title must have been answered by now. Insurance is the only security blanket a person can have in the world we live in.
A world where you cannot be sure whether you will return home or not at night. A world where shootings, accidents and murders are a common occurrence. You may die at any moment. However, insurance will keep your family safe for you when you cannot anymore.