Insurance helps provide financial certainty through a principle called Risk Pooling. Under this system, insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophe risks such as premature death, floods, earthquakes etc.
From past experience we can assume something catastrophic will happen to someone today. By combining resources and helping people share the cost of lifes risks, insurance can help provide financial security in an uncertain world. Through the law of averages, we can predict how many people will fall victum to life?s uncertanties, just not when or who. You would have to set aside a ton of money to prepare for lifes risks on your own. But, when you buy insurance, you get protection and piece of mind for a fraction of the cost.
0 comments