Reasons Why One Needs Insurance

The Relevant Factors in Deciding Whether to Obtain Insurance

The best way to convey the relevant factors used in the weighing process are to provide hypothetical examples which shed light on them.

Assume, for example, that Betty and George, who are next door neighbors, are each considering whether to obtain health insurance. Betty, who is 30 years old, has been healthy all her life, regularly works out, and stays away from junk food. Further, there is no hereditary illness in Betty's family. Betty is single, and receives a five-figure income from her employer.

George, who is also 30, is married to Sue, and they have five children, all of whom are minors living at home. Unlike Betty, George has no desire to exercise, and quite frankly, eats any food that is placed before him, regardless of its nutritional value. Consequently, George is obese. A skilled carpenter, George works for a company that pays him a $ 30,000 salary. His wife does not work, spending almost all of her time caring for the couple's children. Though George has no known illnesses, there is a history of diabetes in his family.

In assessing whether to get health insurance, both Betty and George should consider these relevant factors:

1) Their present state of health:

2) Whether their lifestyles are conducive to being healthy in the future;

3) Whether there is a family history of illness;

4) Whether they will have the financial means to pay for medical care should they have a serious illness in the future; and

5) Whether a serious illness will have a serious financial impact on their immediate family.

Betty is very healthy, and her lifestyle is attentive to remaining healthy. Aside from that, there is no history of illness in her family. Though Betty may one day be confronted with an illness or other problem needing medical care, her income is such that she likely will be able to pay doctor bills without third-party assistance. And, being single, Betty has no need to worry that she will not be able to provide for others if she one day becomes seriously ill.

On the other hand, George, in weighing the relevant factors, has to admit that his lack of concern for his health, his obesity, and his family's history of diabetes do not bode well. Though George has a regular salary, it is needed for expenses to raise his five young children, and for the everyday expenses that he and his unemployed wife have. Unlike Betty, should George come down with an illness in the future, the medical costs to treat it might be such that his children and wife will not have sufficient funds for everyday expenses.

The Security of Insurance

At its core, a policy of insurance is a means through which the policyholder is able to tap into other financial resources if they are ever needed. The benefit that insurance provides is relative to the policyholder's need. That is, the larger the need, the great the benefit. Though everyone hopes that they will never have a calamity requiring them to call upon their insurance, it is a security blanket in the event that one does occur.

Conclusion

As initially stated, the question of whether to obtain insurance is one that each individual should decide for himself. There is no magic answer to the question, but a reasoned weighing of the factors relevant to the type of insurance being considered is a valued way to determine the answer to the issue.

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