Managing your finances goes beyond saving and making a budget. It also involves proper planning, investments and putting some things in place for the future. Whatever stage of life you are currently in determines largely how much and how well you’ll save. This is because your needs at each stage differ. Young couples would have different needs than mid-career parents whose children are almost adults. The income generated also determines just how much you can set aside as savings.
Managing one’s finance can be quite tedious but eventually yields very promising results. Irrespective of your income, you should work towards financial stability. One of the most important but less talked about elements in financial management is insurance. Because life is full of risks and nothing is 100% certain, getting insured is one of the best options things you can do to keep your financial future secure. Accidents happen all the time and although you might not be prepared for the event, you can get ready for the aftermath. There are various kinds of insurance available, Health Insurance, Auto Insurance, House owners Insurance, liability Insurance, Life Insurance and many more. Each of them deals with an aspect of the individual and they have numerous benefits as regards your finances, some of which include:
- Covering losses: The primary role of insurance companies is to cover up for losses incurred by the insured. It acts to mitigate against events that could bring about financial distress to an individual. For instance, a person with health insurance would probably get to some procedures that are usually expensive at a more discounted price. Without such an insurance plan you may end up having to spend your retirement savings which will leave a toll on your finances.
- Provides safety and security: The singular knowledge of the fact that your assets are insured in the event of any disaster can give you a sense of safety which is needed for proper financial planning. This makes you less burdened or financially stressed due to a fear of unforeseen events. Insurance nowadays covers practically all aspects of an individual’s life, so long as the disaster occurs within the policies and rules of the insurance company. The insured can remain to rest assured of his financial security. You can buy a new car being assured that you won’t lose everything in an accident.
- Almost everything is insurable: Assets, cars, houses, businesses, health and even life can be insured. Assets, also referred to as liability covers all material possession the insured might have. Car or auto insurance, just as the name suggests covers damage incurred on the car. Homeowners are advised to get their house insured against catastrophes of any form or lawsuits by the renters. Life insurance is payable when the individual dies which means the financial future of your family is somehow secure in case of any unfortunate event.
- Enhances risk control: Having your business or property insured gives you the courage to take some cost-effective risks you might have forgone. They can do this through the use of some incentives provided by the insurance company. Insurance can also serve as a source of credibility for the insured. This is most especially useful when trying to loan some money. The insurance company acts as a guarantor to facilitate the loan. If for instance, the loan is for your business, the money lent can yield considerable increase if appropriately used.
- Promotes economic growth of the country: Due to the long term nature of most insurance, the premiums gotten from the millions of insured are usually invested into building long term government infrastructure such as dams, power plants, roads, etc. This serves as a form of investment into the nation-building and the industrial development of the country at large. By taking up a policy you are also doing some societal good. The premium collected is invested in social projects, research, technological advancement, etc. This, in turn, causes economic growth and job creation. Plus, the ability to mitigate loss and maintain financial stability, plays a crucial role in promoting the economic growth of a nation.
Click here for more financial planning tips for your family
Conclusion
Insurance has several other benefits both to individuals and to businesses in terms of financial management, but most importantly, it offers financial protection to the insured and is still the most profitable way of managing your finances.