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Why should I have insurance to protect me?

Sometimes things go pear-shaped. If an earthquake strikes, our house burns down, our car is in a crash or we fall ill, we might be faced with large costs that we cant afford. Someone long ago worked out that we could take cover from the storms by not having to take on all the risk by ourselves. We can help each other by spreading the risks among us as a group, and thats what insurance does.

What insurance do I need?

We all probably need some kind of insurance, but not everyone needs all the different kinds.

How much insurance we need will depend on our own circumstances and attitudes. Its easy to buy too much insurance. Its just as easy to not buy enough.

When considering getting insurance we need to weigh up the risks of not having the insurance against the costs of buying it. Ask these three questions:

1.What is the risk I would be insuring against? This could be death, a fire at home, or the car getting stolen. Or getting sick and not being able to work.

2.What are the chances of it occurring? Theres probably a small risk of a fire in your home, but it will cost a lot if it happens. The chance of your car being damaged or stolen is much higher, but the costs probably wont be as high as losing your home.

3.What would happen? Would your family be able to pay for funeral and legal expenses in the event of your death, and how would they manage without your income? If there was a fire in your home, would you be able to replace the house (if you own it, that is) and all your possessions, or would you lose them completely?

Bottom line

If you cant afford for something to happen, you should seriously consider taking out insurance.

 Insurance is important when wed be badly affected by a loss even one that is not very likely to happen.

Your ability to earn is your greatest asset, losing this asset even for a short term can have long lasting financial consequences.

Sickness injury or disease, medium or long term can stop you from working for a long time. If you are not working you will have no income. Sickness can happen at any time, and without any warning. If you are sick and cannot work, how will you pay the mortgage or rent ? What about the monthly bills? How would you put food on the table?

On an income of $50,000 your lifetime earnings could easily exceed $2m while your major assets (house, contents and car) may only be a quarter of that.  And, of course, you cant maintain your lifestyle if you lose your income for any reason.

There is a 32% chance of a Male and 37% chance of a Female being unable to work for at least 6 months due to sickness or accident at some point during their working life

So. Im healthy right now, I think Ill get this insurance later Are there any guarantee that you wont get a sickness that prevents you from working for a period?

For more information feel free to contact Shane Blummont here.

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