Insurance - an Investment or expense
Posted on June 5th, 2007 at 8:37 amMany individuals are faced with the dilemma of determining the role of their insurance – an investment in their future or an expense to be avoided. Because the rates of some types of insurance are so expensive, it is often a question of whether the price of purchasing the insurance is justified by the risk of not having the insurance if something happens. In many cases, the risk justifies the price of the insurance, even if the individual never has to make a claim against their policy.
In many cases, the decision of whether or not purchase insurance for certain items has largely been taken out of the hands of the individuals who need it. For example, it is almost impossible to obtain quality healthcare without health insurance, valid home owner’s insurance is a condition of many mortgage agreements and in many states, it is illegal to drive without some form of car insurance or proof of financial responsibility. The nature of the nation today is to require many individuals to hold these types of insurance to lessen the impact on the economy in the event of widespread loss.
In many cases, individuals consider their insurance policies to be a necessary expense to ensure that they are covered financially in the case of an adverse event. Insurance is meant to protect the individual from problems that may or may not occur. Many individuals will never need to make a claim against their insurance policy, but for the individuals that must make a claim, insurance can be a life-saver.
Some individuals consider insurance an investment in their future financial success as their savings and everything that they have worked to build will not be wiped out in the event of an adverse event, such as a fire, flood, or death in the family. The insurance is used as an investment to ensure that any adverse events will be paid for by the insurance company that has issued the insurance policy to the individual. The payment of premiums on a timely basis for the insurance policy will help the individual not have a repair bill that is impossible for them to pay.
Some individuals may literally consider insurance an investment and purchase insurance products to add to their investment portfolio. These insurance products are treated like insurance policies, but will rise and fall in value in conjunction with the current investment market and the individuals that possess these insurance instruments have the ability to withdraw a portion of the funds to use for other purposes.
Whether an individual considers insurance an investment or an expense depends on how much money they are paying for their monthly premium, the value of the items that they are insuring, and the amount of risk they would be assuming if they did not possess the insurance policy. If is difficult to determine the value of the insurance policy if the individual has never had to make a major claim against the policy, but many individuals have found that it would have been extremely difficult for them to repair or replace their property without the help of the insurance policy. Whether the individual considers insurance an investment or an expense, it is often better to have it than to not have it.