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Why Insurance Is a Necessary Part of Your Financial Security Plan

by Guest on July 19, 2011

Many people think of financial security as having a lot of money. This isn’t necessarily true.

As is the case with devastating health conditions, money in the bank can go quickly when expenses get out of hand.

Or consider the case of trying to save money by buying cheaper insurance than one may need.  When extensive damage to a home comes from fire or floods, and your cheaper insurance doesn’t provide the coverage necessary, you will realize that expenses can add up quickly.

Insurance is a “Spend a Little to Gain a Lot” Category

Sometimes it makes sense to spend more to save money, but with insurance, you really end up spending a little on something that helps provide a lot of security in case something goes wrong.

Benefit of Health Insurance

When a major medical catastrophe hits, proper health insurance can cover much of the cost. It’s easy to think, “It won’t happen to me”, but consider the question, “What if it does?”.  Where would you be financially if you needed a major medical procedure and didn’t have the right amount of insurance – or none at all?

Benefit of Car Insurance

Consider car insurance.  It is an area where the proper insurance can help to provide financial security. With the proper car insurance, you are covered whether it is your fault or not, and medical bills that go into the thousands in a short time can also be completely covered.

Benefit of Life Insurance

There are many misconceptions about life insurance. If you have life insurance, do you know how much it would provide for your family if you lost your life today? Some life insurance packages have a lot of benefits now, but very few when you actually pass away. It is important to look at all aspects of the package.

Benefit of Homeowner’s Insurance

Finally, house insurance is an area where people often skimp and want to save money. When devastating damage does occur, standard house insurance will not always cover the category called ‘acts of god’. But, when major damage is done and your house has become unlivable, this is when you need good house insurance the most.

A Well-Rounded Financial Plan

Proper financial planning is the combination of many important details. Emergency funds are a good place to start. Other areas necessary to a well-rounded financial plan include: investments, a job that provides adequate cash flow to cover expenses, proper budgeting, a spending plan, a savings plan, and a diversification of income if possible.  These are but a few aspects that help provide security of a financial plan.

Although several aspects to financial security do exist, the proper insurance will be part of the financial planning process regardless of the economy. Those that consider the possibilities that insurance is designed for will be reassured and better prepared if disaster strikes.

This article is contributed by Elijah Wells-Collin of

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