Why buy Insurance?

The other day, one of my colleagues asked me this question.
Have you ever wonder why people buy insurance?

He said insurance is CRAP!!! People have to pay a sum of money every month or year (Very painful right?). It has to be long term (more than 15years usually) before their insurance policies breakeven and if they stop paying halfway, they either lose all their money or a significant portion which they paid throughout the years. The best way to enjoy the benfits of insurance is through sickness, pain or death. But who wants to suffer from sickness and pain? Who wants to die? I dont know about you but I definitely dont want these to happen to me. But does anyone have the ability to stop all these from coming? Nope.

My next question is: Since insurance is so crappy, why do people still buy it? Ask yourself this. What makes you buy the health insurance your insurance agent told you to? Why do you want to set aside a couple of hundreds every month into life insurance when you could jolly well splurge it on some new shoes, new dresses or a good meal?

Two simple reasons: Love & Responsiblility
Thats the two most common reasons I get when I ask this question. 
Because we know that our family will be taken care of should anything unfortunate happens to us. Because we dont want to be a burden to our love ones. Because we know that we cannot afford the heavy hospital bills. Because we dont want to jeopardise our retirement plans for unexpected illness. Because of these, we are willing to set aside 10-20% of their income for insurance. Painful but necessary.

I am sure that unless you are a selfish, insensitive person who doesnt really care, you will want your family to live in dignity instead of charity should something happens to you. You want to make sure that when you are gone, your children education will not be affected and your spouse dont need to work extra hard by taking up another job to keep up with bills. You want to make sure that there is always food in the fridge and they are able to carry on with their lifestyle just the same way before you are gone. Because you love your family and understand that your responsiblity does not end even when you are gone, that is why you made a commitment to buy insurance.

Anyway feel free to comment (so that I know you guys are reading it) or drop me an email @ lawrenceho@advisorsclique.com.sg. Thanks for reading.