Before shopping for the right insurance policy, you may want to take a few moments to think about how insurance affects your life.
If you're reading this article, you're probably interested in insurance. Most likely, your interest is not academic, but is driven more out of necessity. Here's what you absolutely have to know to understand the idea of insurance.
Insurance: Being Risk-Averse Has Advantages
Risks are a simple part of life. As a society, we have created insurance to avoid most every type of risk imaginable by assigning a dollar value to it. You can buy dental insurance, travel insurance, life insurance, home insurance, car insurance, health insurance, rental insurance, and even funeral insurance. People are willing to pay for peace of mind. These various types of insurance assure policy owners that if the worst happens, they will be able to recuperate their losses with a settlement check.
The Philosophy of Insurance: Idealists Cover your Eyes
Out of all the types of insurance out there, the most interesting is probably life insurance. Life insurance assigns a dollar value to a person's life. If that person dies, his or her beneficiary receives that dollar value, essentially relegating life to the realm of material goods. For the idealists of this world, this philosophy seems a bit surreal. But for pragmatists, life insurance is very prudent, especially if the person covered by the policy earns the majority of a family's income.
Insurance exists because cash is supposed to be a substitute for things you own or care about--such as your car, your teeth, your health, or your loved one's life. Looking at life through the lens of what is insurable--cars, homes, travel--reveals how much money drives and affects us as human beings.