Do You Need Insurance?

IN SOME lands certain kinds of insurance are compulsory. In others, most kinds are practically unknown. In addition, the cost of insurance and the type of coverage provided vary widely from country to country. But the fundamental principle of insurance—sharing risk—remains the same.

Naturally, the more property a person owns, the more he has to lose. Similarly, the more family responsibility a person has, the greater the impact if he or she dies or becomes physically disabled. Having insurance can alleviate one’s concern about the possibility of suffering a loss of property or a disabling accident.

Yet, is it wise to spend money on insurance even though a claim may never be made? Well, is keeping a spare tire in the car a wasted investment, even if the tire is never needed? The sense of security to the car driver may make the expense of the extra tire worthwhile. While financial compensation cannot make up for certain losses, it may compensate for other losses.

What types of loss do insurance policies cover?

 Types of Insurance

Much of the insurance purchased by individuals falls into the categories of property, liability, health, disability, and life insurance.

Property insurance: Insuring against the loss of property—home, business, car, or other possessions—is among the most common forms of risk management. This is the insurance that John, mentioned in the preceding article, decided not to buy for his carpentry shop and tools.

Some home-insurance policies include coverage of certain items inside the home. If you buy this type, it is wise to make an inventory of your insured household possessions, if possible including photographs or a videotape. This inventory along with any appraisals or purchase receipts for the items should be kept in a safe location outside the home. Having these records could make settling a claim much easier.

Liability insurance: Anyone who drives a car, owns a home or other real estate, operates a business, or employs others runs the risk of liability for an accident. And that accident may result in property damage or injury or death to another person. The car driver or the owner of property or a business may become liable to pay for property repair or for the medical treatment or even the pain and suffering of another. In many countries employers and drivers are required by law to carry liability insurance to help pay these expenses. Even where insurance is not a legal requirement, a driver, property owner, or employer may be held legally or morally responsible to help victims of an accident or their families.

Health insurance: Many countries have some form of state-sponsored insurance that provides such benefits as pensions for seniors and medical care. Even where this is the case, however, such insurance may pay only a portion of medical expenses or may pay for only certain ones. Some individuals, therefore, obtain additional private insurance to help them pay the remainder. In many places workers may receive health insurance as a condition of their employment.

Some health-care plans, including managed care arrangements and health maintenance organizations (HMOs), provide comprehensive medical care for a set monthly or annual fee. These organizations endeavor to lower costs by providing less-expensive medical care and by promoting preventive medicine. However, in an HMO, a patient’s choice of doctors or treatment may be more limited than with traditional health insurance.

Disability insurance and life insurance: Disability insurance provides some income if a person is injured and cannot work. Life insurance provides financial assistance to a person’s dependents in case of his or her death. Such insurance has enabled many families to pay off outstanding debts and carry on their routine of life after the injury or the death of their main breadwinner.

 Finding Reliable Insurers

Insurance is based on the principle of paying money now for financial protection in the future, so it is not surprising that the insurance industry attracts more than its share of swindlers. This is true in developed as well as developing economies. Therefore, one is wise to beware of so-called low-cost insurance and to be alert to any other questionable insurance scheme. Too many hopeful buyers have ended up with nothing when such companies failed to pay on their policies—or just vanished overnight!

So, as with any other important purchase, comparison shopping is wise, and it often saves money. For instance, some companies offer lower rates on health insurance to nonsmokers and on car insurance to those who have passed driver-education courses. But how can a potential buyer find reliable insurance?

A first step can be to find out what others have experienced with various insurance companies and agents. Friends and neighbors may know a company’s reputation for service or an agent’s reputation for integrity and personal concern. It is also good to stay alert to news reports indicating which insurance companies may be having problems.

Additionally, a company’s record and financial standing may be checked by consulting insurance rating guides at a library or a bookstore or on the Internet. These can provide the answers to such questions as: Is the company financially secure? Has it been in business successfully for many years? Is it known for handling claims quickly and amicably?

Insurance rating guides, however, should not be considered infallible. One long-established, multibillion-dollar insurance company had to be taken over by the government only one week after it had been rated as superior in a well-known handbook!

Role of Insurance Agents

An insurance agent is normally committed to a particular insurance company. A broker, or independent agent, may consult various companies to find the best insurance available for a given price. Both need to maintain a good relationship with clients in order to keep their business. When an insurance agent is trustworthy and concerned, he can be of great aid to his clients.

First, a good agent or broker can help a client to select appropriate coverage from the seemingly endless list of insurance options. He will also explain the details of the policy to his client. As many well know, insurance policies are notoriously complicated. The president of one insurance company admitted that he did not understand parts of his own homeowner’s policy!

An agent’s explanation can help the client to avoid unpleasant surprises. For instance, most property- and health-insurance policies have a deductible. This is a set amount that the insured person must pay—say, for car repairs or medical bills—before the insurance company pays its share of a claim. The agent can also become his client’s advocate with the insurance company in case the client has difficulty obtaining a settlement.

Insurance and Christians

Does a Christian who trusts in God’s help and anticipates the end of the system of things need insurance? Back in the year 1910, some posed this question to Charles Taze Russell, editor of the magazine now known as The Watchtower, companion magazine to Awake! Russell acknowledged that the Bible foretells the end of the present economic system, adding that personally he carried no life insurance.

“Nevertheless all are not situated alike,” Russell observed. “A father having dependent wife and children—if the latter be of tender years and unable to make their own  living—has some responsibility for them.” (1 Timothy 5:8) A man might set aside funds to provide for his family, Russell noted. “But in case he could not do this, he might be able to discharge his duty toward them through the medium of life insurance.”

One responsible for a family might also provide health, disability, and other forms of insurance for its members. Many single individuals carry insurance to facilitate obtaining needed services as well as to protect themselves from going into debt in case of accident or illness.

Honesty comes into play in connection with insurance. A true Christian would certainly never deceive an insurance company, either when filling out an insurance application or when making a claim. (Hebrews 13:18) He or she would keep in mind that the purpose of insurance is to compensate for loss. It is not a lottery ticket—a chance to live a life of luxury.—1 Corinthians 6:10.

Christians obey all laws related to such requirements as obtaining insurance. Where the law states that they must have proper insurance to operate a business or drive a car, they comply. (Romans 13:5-7) Honesty and practical wisdom also dictate keeping up with the payment of premiums. If payments are not made, the company may cancel the policy and not pay claims. It is prudent to verify payments periodically by checking with the company directly and to retain written proof of payment, such as canceled checks.

Whether insurance is available where you live or not, there are basic precautions that can help you to avoid loss and thus spare you and your loved ones pain that no insurance claim can erase. We will next consider some of these precautions.

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A trustworthy agent can help you to make decisions about insurance

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Many carry insurance, whether required to by law or not