Are you insured, and do you have the proper protection? “Survey says,” most of the American population cannot determine the difference.
According to BusinessDictionary.com, insurance is a risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by events beyond the control of the insured party; and, protection is the act of protecting someone or something, or the state of being protected. A person or thing that prevents someone or something from suffering harm or injury.
Without hesitation, consumers purchase insurance to protect the value of their vehicles, homes, electronics, cell phones and the like. There is never an option to insure these items for less than their value. However, according to 2015-LIMRA-Fact Sheet (Life Insurance and Marketing Research Association), 132 million Americans rely on life insurance to protect their financial security and 70 million people know they need more life insurance. Sixty five percent of Americans won’t buy because they believe it’s too expensive and 25% wish their spouse or partner would purchase some or more life insurance.
In my experience as a Certified Financial Educator, I have found that individuals lack a clear understanding of their value. The method commonly used in the financial service industry to determine one’s insurable need/economic value is the D.I.M.E. (Debt, Income, Mortgage and Education) Method. Using this method allows anyone to account for all of their liabilities within their coverage and transfer the risk of dying too soon to the insurance carrier.
Yes, it is possible to have insurance, but not be properly protected. I strongly encourage you to seek professional assistance to determine what is appropriate, suitable and affordable for you and your family.
About the Author: LaShonda Johnson is a Licensed Certified Financial Educator. She is a native Houstonian with 2 children and 3 grandchildren. Her background includes 16 years in Corporate America in management, sales, training and development, and 10 years as an independent capital medical equipment distributor. LaShonda’s passion is to provide financial education to as many individuals and families as humanly possible. Her goal is to empower people with the financial knowledge necessary to help them proactively plan for their future.