Saturday, December 08, 2007

Insurance for our security

It was not so long ago that insurance was considered a taboo in the Asian society for fear that if one talks about the "what if something bad...," it will really evoke the bad incident from truly happening. Of course that is truly a way of the past.

Today almost everyone living in modern, industrialized countries buys insurance. Insurance is a legal contract and a form of risk management that protects people from the financial costs that result from loss of life, loss of health, lawsuits, or property damage. Insurance provides a means for individuals and companies to recover some loss or cope with some of the risks faced in everyday life. People purchase contracts of insurance, called policies, from a variety of insurance companies.

In fact the laws in most states require people who own a car to buy car insurance before driving it on public roads. Lenders require anyone who finances the purchase of a property or vehicle with borrowed money to insure that property. So it is wise to compare some cheap car insurance before getting a loan for a car.

There is also the consideration of whether the insured item will appreciate in value or depreciate in value. That will determine the cost of the insurance policy. When someone acquires a new car, for instance, it depreciates (loses part of its value) over time. Other items, such as houses and jewelry, may appreciate (increase in value). Insurance policies can include inflation protection for very valuable items, such as houses, to allow coverage to match such increases in value. In short the way we look at home insurance is different from how we access car or life insurance.

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