What is insurance and why is it important?
Life is uncertain—none of us knows what tomorrow holds.
Sometimes everything goes well, and sometimes an accident, illness, or financial crisis changes everything.
In such times, insurance becomes an invisible shield in our lives, protecting us in times of crisis.
But the question is—what exactly is insurance, and why is it needed?
Let’s understand it in simple terms.
What is insurance?
Insurance is a financial security system that provides financial support against potential losses or risks.
In simple terms—insurance means protection.
When you purchase a policy from an insurance company, you deposit a certain amount (called a premium) every month or year.
In return, the company promises to pay you a fixed amount (called a claim amount) in the event of an unforeseen event or loss.
Insurance is a contract that allows you to cover significant risks with a small amount of money.
How does insurance work?
Suppose you have insured your vehicle.
If your vehicle is involved in an accident, the cost of repairs won’t be entirely out of your pocket—the insurance company will cover a significant portion or all of the cost.
Similarly, if you have health insurance and are suddenly hospitalized, the insurance company will cover your medical bills.
Any insurance policy you have—automobile, health, life, or property—helps maintain your financial stability.
Main Types of Insurance
There are many types of insurance, but they can generally be divided into two broad categories:
Life Insurance:
This covers the protection of your life.
If the insured person dies, the family receives a fixed amount of money.
This helps the family overcome financial difficulties.
Non-Life Insurance (General Insurance):
This includes health insurance, auto insurance, travel insurance, home insurance, or business insurance.
That is, everything that is related to your life, but is not life itself.
Why is insurance important?
Now let’s talk about the real question—why is insurance so important?
There are several solid reasons for this.
- Provides Financial Security
Insurance gives you financial stability in uncertain circumstances.
If you have insurance in case of an accident, illness, or natural disaster, you don’t have to sell your savings or assets.
- Protects your family’s future
Life insurance is like a safety net for your family.
If a family member suddenly passes away, the insurance amount keeps the family financially afloat.
- Provides Peace of Mind
Knowing that you have assurance of protection in case of any unforeseen eventuality provides a unique level of peace of mind.
You can live a carefree life and focus on your goals.
- Savings and Investments
Some insurance plans, such as term plans, endowment plans, or ULIPs, not only provide protection but also serve as a means of investment and savings.
This helps you build wealth for the future.
- Legal and Social Security
In many countries, insurance is legally required—such as auto insurance.
This ensures that you receive compensation not only for yourself but also for others in case of an accident.
Insurance also symbolizes social responsibility—it means you care not only about yourself but also about the safety of others.
Things to Consider When Purchasing Insurance
Some things are important when purchasing an insurance policy—
Read the terms and conditions carefully.
Don’t judge a policy solely by its low cost; consider the coverage and claim ratio.
Pay premiums on time to ensure the policy remains in force.
Submit all correct and complete documents when filing a claim.
With a little understanding and awareness, you can take full advantage of your insurance.
Conclusion
Insurance is not a luxury, but a necessity.
It protects us from circumstances beyond our control.
Just as we lock the door to our house, insurance provides a secure lock for our life, health, and future.
Sometimes we think, “This won’t happen to me,” but life doesn’t always go according to plan.
Insurance guarantees confidence in this uncertainty—so we won’t be alone in difficult times.
So remember—
Insurance is not an expense, it’s an investment in security.