Insurance provides protection and support against any unexpected circumstance.
For some people, when talking about financial freedom, it refers to finding the balance between generating income and managing expenses, so that the account does not remain at zero at the end of the month or year, nobody wants to see red numbers negatives. The truth is that individual financial management, and especially if you are looking to be financially free, to have more free time and peace of mind, to cover economic needs, in addition to including investment and savings, must also include protection.
You do nothing with saving and accumulating assets, only to lose them due to an unexpected catastrophe in the future. This is where the protection of your assets comes into play, so as not to lose them, after a lot of work getting them, and the way we protect our assets is through insurance.
Insurance is one of the most important, but underestimated, aspects in conversations about financial independence or wealth accumulation, normally people see it as an expense rather than an investment, and this “expense” approach diminishes the relevance of insurance. when evaluating our finances.
Insurance is an investment, since it protects your assets in times of catastrophe, accident or emergency, which without the proper insurance policy would result in loss of property or income. Thus, the value paid for them, called the insurance premium, generates the peace of mind of having support and, in this sense, more than an expense, insurance is an investment.
This is how events such as disabilities, job loss, natural disasters, accidents, thefts, fires, among others, can be insured to protect companies, individuals, and their families from economic consequences.
The benefits are not only concentrated in the economic field, remember that we are also talking about peace of mind, insurance does not materialize only by receiving an amount of money for the unexpected event, but it also generates peace of mind in the family nucleus, an intangible that is very difficult to assess.
It is an investment
As we have told you above, insurance is an investment, but what does this mean? First we have to understand what an investment is: it is when you put effort and/or money into something with the purpose of obtaining a greater benefit in the future. .
Let us clarify that the benefit of insurance is for the future, protect yourself from a financial catastrophe during an accident, a robbery, an illness, an earthquake, among others, it is very simple, today you pay your premium so that tomorrow you do not have to pay a fortune from your pocket. The premium will only be a small amount compared to what you would have to pay for a full damage, catastrophic event or emergency.
Gives you financial stability
A great benefit that arises from not having to spend huge amounts of money every time adversity occurs, is that you do not live prey to uncertainty, worry or economic ups and downs.
Risks are always present. You know it, there are things that we don’t plan but in the end they always happen, we get sick, the children fall and suffer injuries, the car breaks down, a pipe explodes, in short, many times it happens in our worst economic stage, so the misadventure is not only expensive for us, but also leaves us with broken pockets.
Hiring one or more insurances that cover these unexpected events allows you to stop juggling your money every time something happens. That is known as financial stability.
Avoid getting into debt
Insurance just falls on you like a balm at the worst times, if you don’t have insurance and an unexpected event occurs, who do you turn to if you don’t have money in your pocket? What happens if only your emergency fund is not enough? Well, you have to run out to see who lends you the money and it is usually a bank, and these carry interest, sometimes very high, and although bank loans are lifesavers in the most difficult moments, if you put it in a long-term perspective, they are not always It is the best, because you are left with a debt that you will probably get out of in years and that in the long run decreases your financial reach.
Here insurance comes in as a lifeline before the catastrophe even looms, they are prevention mechanisms and that is why they are an excellent option that avoid getting into debt and paying high interest.
Allows you to save
One of the most positive benefits of achieving financial stability through insurance is that you can afford to save. Either by not paying contingencies out of pocket or by hiring policies that accumulate cash value. Insurance is a tool that will save you a lot of money in the long run.
Maintain and even improve your lifestyle
If with one or several insurances you can have more financial autonomy and not be at the mercy of disaster and disbursement, you clearly have greater economic capacity and you can have better control of what you spend on. If you already have a family of your own, or even if you live alone, a good way to make use of that power and financial freedom is to know that you spend your money to give yourself a better life.
Avoid leaving debts for your children
Just as you can leave assets to your heirs, you can also leave debts. If you are well insured, in the event of an unexpected or premature death, the insurers will take care of finishing paying the mortgage or will pay for the final expenses due to your death. This means that you will leave your family without financial problems or problems to pay for the house where they live.
Luckily, life insurance is an excellent option in these cases, and many times the financial institutions that offer mortgages already sell it to you in a combo with life insurance. That’s right, the insurer assumes the risk of your possible death and who pays the rest of the mortgage.
What to keep in mind when buying insurance?
1. Coverage
It is the insured amount in money and the events in which it is entitled. It is also very important to consider the dates between which the risk is insured.
2. Premium
It is the price of the insurance policy. The ability to pay must be evaluated and the value of the periodic or single premium adjusted to the cash flow within your finances.
The price depends on the insured value, generally the higher, the higher the premium. For this reason, when structuring the insurance, the needs must be considered and the risk to be insured assessed.
3. Insurance company
The insurance company is the issuer of the policy and as such is the one that has to respond when the event occurs. For this reason, it is important to evaluate the entity, its support and its solvency, but not everything is money, so please also evaluate the infrastructure, the response to customer service and the means of contact with said company. The trajectory of the insurance company and its experience are also points to take into account.
4. Agent or broker
They are the insurance intermediaries and are in charge of distributing the product and giving advice to the client. There are different types of intermediaries, find one you trust and with the necessary knowledge.
5. Exclusions
Events in which, despite the occurrence of the insured situation, the company does not have the obligation to pay. To be clear about what is being bought, it is important to find out this point and read the fine print.
Every day there are risks that can harm your financial stability and peace of mind. But insurance is an economic plan that offers you, as we have already seen, many benefits. Regardless of the insurance you choose, you have the certainty that you could face any fortuitous event that occurs in your life.
With this financial instrument, you will not only have the best gift for yourself, but you will also give it to those you love, since with one or more insurances, you will have the certainty of protecting your assets and your loved ones while saving for your future. Without a doubt, it is the perfect tool that will give you the balance your personal finances need.
