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Why Does Insurance Exists And What Are Its Positive Sides? - Own Business News
When we hear about insurance, the first thing that pops our mind is that everything is evil fraud. Since we have this idea, we have never stopped to think whether there are advantages and positive sides of getting it. We see that companies are amazingly rich and that some policies are mandatory while others are not. Most people think that they should avoid buying insurance policies because it represents wasting a significant amount of money. The reality tells us that without insurance, our financial world would end and that would lead to the point where we wouldn’t have things that we can purchase by cash. First, we have to understand the basics and how it affects our society so that we can determine its value for our system. We should also understand how insurance agents work, visit this website to get a perspective on how they work. Even though you probably think that insurance represents nothing but pain and a waste of money, there are reasons why it is essential for our entire society. Also, unbelievably, without it, we would have less dollars as well as savings. We Would Have To Pay Higher Taxes Than Today First, you have to understand that insurance has the ability to reduce our money that we have to give. Without it, many injured people would become the problem for the state or federal government, which will ultimately lead to a reduction in paying medical bills. Therefore, the taxes would be much higher if the state or country has to take care of your rehabilitation or to treat you as an injured side after the accident. On the other hand, when you decide to add a few bucks to premiums, you will allow to your insurer that he has enough revenue to pay for property damage or bodily injury costs that resulted from various property damage and liability, as well as car accidents, which happens every single day in the USA. Insurance Boosts the Economy The second reason why it will benefit our society it has to do with business pursuits and capitalism. Without it, the USA would have fewer businesses than today. You have to ask yourself how one business can survive after a significant loss. For instance, if tornado entered your city and destroyed your property, without insurance premium, you would have to do it yourself or let the state do it for you, which leads to our first idea that taxes would be higher in that particular case. The only solution that you can do is to pay the money from your bank with the idea to rebuild manufacturing equipment and premises. That will ultimately lead to high-profit loss and even to bankruptcy. If you want to see how policies affect our taxes, you should click here. On the other hand, imagine that tornado destroys a bank. What would they do with the cash? If there were no insurance, no one would pay the bank? They also have the insurance that will allow them to play safe and to avoid the problems that could affect everyone in society. You should also consider liability claims when it comes to slip and fall because that would lead to the bankruptcy of all small businesses around you. It does not matter whether this is a legitimate claim, because only a small number of businesses that would have the ability to pay everything due to the court process. Insurance Is Something That Makes American Dream Possible The vital benefit of insurance is the idea that you will be able to get the credit that will allow you to purchase things that will help you live a common and happy life. For example, you will need an insurance policy if you wish to purchase a new home or a new car and you do not have enough cash to pay for it. With proper insurance, your bank will have more interest to give you a loan, and you will have more chances to convince the bank to lend you money. It is a common fact that they would not give you $200k to purchase a house if they are not certain that you have an appropriate policy. At the same time, imagine that some natural disaster such as tornado passes your home and crashes everything. You would stop to pay the mortgage, which banks know. Therefore, they will rather give you a loan for a fully insured home, then vice versa. Check this website: https://www.investopedia.com/terms/b/bankinsurance.asp to learn more on bank insurance. Insurance Creates a World Economy Apart from everything else, it features a main role in world financial markets. Since most companies will invest your premium money in startup companies or government bonds, that will allow them to trade further and to build the country’s infrastructure. That will save you from paying significantly high taxes because if insurers avoid investing in them, and we would have to pay to government and state for new bridges and roads. Remember the tsunami that stroke Japan, companies paid billions of dollars to rebuild destroyed properties. Without it, they would have to pay everything themselves, which would be problematic and create havoc on the world financial system.