Pros and Cons of Life Insurance

Insurance is something almost everyone has, it is usually beneficial to have when you are in an accident or your home is damaged. There are certainly a lot of pros of insurance, but not many people think about the cons. I believe that it is best to be safe and have insurance anyways, but people may see that the cons make it not worth having.

Auto Insurance is one that most people see that it is very important to have. It is so important that most states require you to have auto insurance or some form of financial responsibility to pay for damage to your car. Auto insurance includes liability coverage, collision coverage, and comprehensive coverage. Liability coverage covers costs if you are responsible for an accident. Collision coverage covers the cost to repair or replace your car if it is damaged in a wreck. Comprehensive coverage covers costs that aren’t caused by a wreck.

Homeowners or renter’s insurance is another important type of insurance that many people like to have in case they need it. It can cover things in case they are damaged or destroyed in a flood. These types of coverage pay to repair or replace items that were damaged or destroyed in your home. The cost of renters and homeowners insurance is determined by the amount of things you want covered by the insurance.

Insurance that can protect you in the event of you not being able to work and earn money can be crucial to not going into debt. Long-Term Disability insurance covers specifically that. If you are out of work for a long time due to illness or injury. You may not think that you will have some sort of disability that will sideline you from your job, but it happens to many people. Not having insurance on this is something that a large percentage of society would not want to take a risk on. The good news is that many companies offer this to their employees, so that is a good way to make sure you are well protected.

Life insurance is something that only 70% of Americans own. If you do not have this and you die unexpectedly, it could lead to financial problems for your spouse and family. When you sign up for life insurance, you typically sign up in a term. If you die before the term is over, your family will receive a payment. Without your income, it will likely be a challenge for your loved ones to pay bills. They can avoid the situation if you sign up for life insurance to make sure that your family does not have to struggle without your income.

A common way to go into debt is on medical bills, as they are very expensive and often are unexpected. A good way to be prepared for a medical bill is having health insurance. If you have a major medical emergency it can lead to tens of thousands of dollars needing to be paid off. The chances are, that you will not have the money to pay for the expense. Medical insurance has a high cost, but you will likely be out of luck if you decide to go without it and have to pay for medical bills.

Although the advantages of insurance are believed to outweigh the cons by almost everybody, it is important to know both pros and cons. The largest pro of insurance is that it protects you from emergencies. If there is an emergency, you likely will not be able to pay for it without consequences. Another pro is that it provides guaranteed income if you are not physically able to work. If you are not able to work, and do not have Disability insurance, you may be without your income for some time. Insurance makes people safer and more prepared to handle paying high costs as there will be someone there to help pay.

One problem of insurance is that it will not cover all payments. Insurance is great, however it will not pay for everything. With already having to pay just to have insurance, it will not even cover the entire price. Some people may not have saved at all for a situation and now cannot pay off their medical bills or whatever it may be. People may already be tight for money, and now they have to pay part of the cost even though they have insurance. This is why you should always save and be prepared for something like this.

Insurance companies are going to favor their needs over yours. If an insurance company can, they will barely compensate for the situation at all. The companies are going to do whatever it takes to pay you as little as possible. When it comes to profit, they will favor making money off you than helping you out of an emergency. This is another reason why it is important to know that you will still have to pay for things even if you have insurance on them.

If you are a lucky person, and either do not have to pay for emergencies often or at all, you are likely paying for something that won’t be used. Prices for insurance can vary based on who you are, but if you do not need to pay large costs often, then you may be giving money to insurance companies that you will never need. Insurance is required in most states for vehicles, but many other types of insurance are not required to have. If you have had insurance for a long time, and never used it, it is still not good to get rid of it. It is always smart to be prepared, but there is a good chance that you have spent money on insurance and you have not needed the insurance yet.

Most types of insurance are important to be financially secure, however there are cons to having them. They provide protection against emergencies that you can not afford to pay for. An insurance company will try, however, to pay as little as possible, as most companies care more about profit than your financial well-being. It is important to have insurance on a lot of things in case something happens. One thing that is for sure, is that the pros of having insurance, outweigh the cons.   

Works Cited

1. CarInsurance.com. (2021). Liability car insurance coverage.
2. Insurance Information Institute. (2022). What is comprehensive insurance coverage?
3. Investopedia. (2022). Life insurance.
4. LongTermDisabilityInsurance.com. (n.d.). What is long-term disability insurance? https://www.longtermdisabilityinsurance.com/what-is-long-term-disability-insurance/
5. Mayo Clinic. (2022). Health insurance: Understanding the basics. https://www.mayoclinic.org/healthy-lifestyle/consumer-health/in-depth/health-insurance-basics/art-20044166
6. National Association of Insurance Commissioners. (2022). Homeowners insurance.
7. National Association of Insurance Commissioners. (2022). Renters insurance.
8. National Conference of State Legislatures. (2022). Auto insurance.
9. Smith, D. (2021). Pros and cons of having insurance. The Balance. https://www.thebalance.com/pros-and-cons-of-having-insurance-4160775
10. The Simple Dollar. (2022). What is long-term disability insurance?