The Smart Investors

Insurance is buying peace of mind. You sleep better knowing disasters won’t destroy you. It requires you to pay a little amount of money today to avoid disaster tomorrow. Insurance is a must for everyone because of unforeseen occurrences. Imagine you slip on wet stairs, break your leg, and get a $15,000 hospital bill but without insurance, you are going to pay all the hospital bills from your own pocket. But with insurance, you might pay just $500.

How it works in 3 simple steps:

1. You will pay small regular fees that is called the premiums, say $50-$200 every month
2. The insurance company gets money from thousands of people and that's how they are able to pay their clients.
3. When disaster strikes like car crash, house fire, illness, they will cover costs

Why Insurance Isn't a Waste of Money

Quite a lot of people have the thought “what if nothing bad happens? I wasted money!" But I would also like to ask those people think question.

Spending $5/day on coffee = $1,825/year
Health insurance = ~$1,200/year
Which protects you more? Obviously, the answer is health insurance.

5 Insurance Types Everyone Should Know

1. Health Insurance: This is a type of insurance that covers doctor visits, surgeries, medicines and any other health related issues. For instance, if Maria’s appendicitis surgery cost $40,000, she might have to only pay $500.

2. Car Insurance: This insurance cover repairs of vehicles after accidents, theft, injuries and other things related to vehicles. Some places require you to have a car insurance by law.

3. Home Insurance : It covers incidents like fire damage, storms, burglaries. The renters also need this to protect their belongings.

4. Life Insurance: This insurance pays money to your family if you pass away. It helps to cover funeral costs and debts.

5. Travel Insurance: This type of insurance saves you when your flights get canceled, luggage lost, or if there are any medical emergencies abroad.

How Do Insurance Companies Profit?

1. They make money with varying risk levels. For instance, the chances are that a young driver may likely have more accident and that's why they pay a higher premium. Also a house built with brick have lower fire risk and that means lower premium.
2. Another way the insurance company make profit is that it’s not everyone who claims at once
3. Lastly, they invest pooled money wisely.

Do I Really Need Insurance?

YES, you need it if:
- You drive a car (mandatory!)
- Own a home/apartment
- Have family depending on your income
- Travel internationally

Maybe you might not need insurance if you’re young, single, have no assets. But the people who fall in this category still need health insurance.

Where to Start

These are the few places to start your insurance.
1. For health insurance: You can start through your employer or by checking healthcare.gov
2. For car insurance, it is advisable to compare quotes on NerdWallet or Policygenius.
3. For renters insurance, you can start as low as $15/month.

The comparison you used makes it clearer. I believe that a lot of people are unaware of what level of financial protection insurance can offer them until they encounter a real life problems.

Exactly. Insurance is equivalent to an umbrella that you do not always require but when the rain comes, you will be happy you had one.