Insurance industry in its core - risk transfer

Insurance is one of those things you complain about pay, but boy, are you happy to pay when required premiums. This is because the insurance is really not so much to pay the 1 gold, but the risk transfer to third parties.

Let us look at a simple, every day we face a dangerous road. Drink driving is a big problem in this country. We all face by a drunk driver did not play our own fault risk. If the person do not have insurance or assets to cover the damage? This is a huge financial risk, let alone face potential health problems can occur.

One way to handle this is simply to save up money to deal with, not the insurance pay. Sounds good at first, but some quick math to prove difficult to have that option. Would save enough money to pay for repair or replacement cars, almost any health-related these days, legal work related medical expenses for any costs required monstrous. This can easily end up in a few million.

The second option is to buy life insurance. That is insignificant compared to the cost of the insurance money save themselves. Instead of saving tens or hundreds of thousands of dollars, you can only pay a few hundred dollars a month's time, to ensure your car. You simply do not transfer the money to the insurance company to pay all the risk. Look at it this way, you have to pay monthly premiums who really are not bad now? If you ever have a request, you know they are not