What good is insurance? You have probably asked yourself this question countless times before. You have an insurance policy and pay the premiums, but what good is it, really? What is the true value of having an insurance policy? When do you utilize it, when do you keep it tucked away for the proverbial rainy day? Read on, young Padawan, and let me share 30 years of wisdom to answer these questions.
At its very foundation, insurance is there to reimburse you for a financial loss you have suffered. Period, mic drop, end of story. If you never have a loss, then you don’t need an insurance policy. The funny thing with losses, though, is their characteristic unpredictability. You just don’t know when or if something bad will happen. So accept this nugget of reality right off the bat: You may never in this lifetime have a need to utilize your insurance policy. And guess what? That is good. Very good, very lucky, very fortunate, because it means you have not suffered a loss. Keywords there — suffer and loss.
In truth, bad things happen to all of us, and the majority of us will in fact suffer a loss at some point, likely more than once in our lifetime. Some idiot will rear-end you while you’re on your way to work. A pipe will break in your house and flood the place. A storm will tear apart your roof. Some jerk will break the window of your car and steal your MacBook from the front seat. You’ll get hurt and need to see a doctor. You’ll get really hurt or sick and be unable to work. And yes, you are going to die, possibly leaving behind loved ones who depend on your financial support.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In order to help you through these downturns, you need a backup plan, an assist, a phone-a-friend, and it’s called insurance.
Karl is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies.
A need for car insurance and disability insurance
There are nearly 6 million car accidents every day in the U.S., according to the latest data from the Bureau of Transportation Statistics. That equates to about 680 accidents every hour. Every hour. So if you think you’ll never be involved in a car accident, think again. You will. It may or may not be your fault, but you’re going to go through that joy.
Having a strong insurance agent or broker and insurance company to back you up is one of the best things, if not the best thing, you can do to be prepared for that inevitability.
You may be in the “nothing can hurt me” phase of your 20s, the “some stuff can hurt other people” phase of your 30s or, like the rest of the population, in the “I don’t want to get hurt” phase. Regardless, thousands of people every day are injured to the extent that they are unable to work. Most people don’t have enough money saved to live without income, so in that case, a solid disability insurance policy would be your bestie.
A need for homeowners insurance
Homeownership. The American Dream. Work hard, save up and then, if the stars align, find a house or condominium you want to buy. Congratulations! Now take that hard-earned savings and hand it over to the bank while at the same time promising to pay them a large chunk of your income every month to boot. You are now a homeowner.
With that accomplishment comes the reality that ever day, thousands of people file claims for losses they have suffered in connection with their home. All that time, all that hard work, all that savings poured into that roof and four walls, and then Mother Nature or something else comes out of left field and takes a bite out of your home. I guarantee you that when that happens, one of the first calls you will make is to your insurance company to ask for help.
A need for life insurance
The old saying goes that the only things guaranteed in life are death and taxes. The time will come when you will die. Of course you will be missed. Know what else? The money you generated will be missed, too, by those you supported. A solid life insurance policy that pays out to your beneficiaries can literally be the difference between your loved ones staying in the family home or being out on the street.
I get it. The value of an insurance policy is sometimes difficult to see since, well, you’re not seeing it. Remember, if all you are doing right now is paying premiums and not filing any claims, that is the best place to be. The alternative means something bad has occurred, and in those circumstances, you will see exactly what insurance is good for.
Want to learn more about insurance? Visit KarlSusman.com.
Related Content
- Five Reasons You Might Hate Your Insurance Company (and Why You Shouldn't)
- California Wildfires and Insurance: Looking for Help
- Who Works to Make Your Insurance Work?
- Why Does One Claim Jack Up My Insurance After Years of No Claims?
- Are You Tempted to Drop Your Homeowners Insurance?
-
Virginia Tax Rebates 2025 Coming Soon? What to Know NowTax Rebates Given a historic 2025 gubernatorial race, tax policy will remain a key issue for Virginians in the months ahead.
-
What to Know Before Flying With Your PetFrom documentation and TSA screening to carrier rules and airport relief areas, here’s what to know before taking your pet on a flight.
-
What to Know Before Flying With Your Pet
From documentation and TSA screening to carrier rules and airport relief areas, here’s what to know before taking your pet on a flight.
-
We Are Peter Lynch: How to Invest in What You KnowTake a look around, go to a free stock market data website, and get to work.
-
Trump Tariffs and Taxes: Waiting to See What Happens Is Not a StrategyLike presidents, tariffs come and go. Policy changes also shift about every two years with the election cycle. If you're paralyzed by uncertainty, you could be missing opportunities to benefit your financial future.
-
Is a Family Office Right for You? The Multimillion-Dollar QuestionAs ultra-high-net-worth individuals increase in number, many are turning to family offices to manage their complex finances. Here's how family offices work, courtesy of a finance professional.
-
This Is How a Lot of Law School Students Are CheatingGrowing numbers of students are falsely claiming a learning disability to score more time to take tests. This has real-world consequences in which fellow students, law firms and their clients pay the price.
-
Stock Market Today: Stocks Rise on Less Deadly ConcernsMarkets are forward-looking mechanisms, and it's good when price action shows there's a future to look forward to.
-
Who Will Replace Jerome Powell as Fed Chair?Even if President Trump doesn't make good on threats to fire Chair Powell, the Fed leader's term ends in 2026.
-
If You're Ignoring Private Markets, You're Missing Most of the ActionPrivate markets are becoming increasingly essential for all investors, not just institutions, and they are now more easily accessible thanks to innovative investment structures.
