Thursday 26 May 2016

Why is insurance important – 8 reasons?


Insurance

  1. Insurance is just another word for preparedness While it may be partly right that Murphy's law (“if anything can go wrong, it will”) smacks of a pessimistic outlook, the fact of the matter is that life is subject to uncertainties, and while being insured is not preemptive by any stretch of the imagination, it does offer the fallback that one needs if the unmentionable happens.
  2. Insurance is neither an investment nor an expense A surprising number of people still belabour the notion that insurance is either a wasteful expenditure, an indulgent extravagance or a profit-minded initiative. The facts belie these assumptions. Insurance is none of these; it is just insurance. By being (and staying) insured you get the sort of fiscal discipline that savings and investments do not bring to the table. A word to the wise, as they say.
  3. Your health is worth insuring The oft-quoted adage that health is wealth takes on an entirely different meaning if you ever find yourself in the unenviable position of having to pay for medical bills without health cover. Remember: health care is expensive; health insurance isn't.
  4. Life insurance is an act of love As the head of a family, life insurance is one of the more thoughtful gestures that you can show. Life insurance helps your dependents tide over your loss with greater resilience.
  5. You've worked hard to buy a home After spending years dreaming, planning and working for it, you finally have a home of your own, the way you like it. A small additional outlay in the form of home insurance ensures that what is yours remains yours. Home insurance is one of the prerequisites for modern lifestyles.
  6. No, something doesn't have to 'go wrong' for you to benefit One of the popular misconceptions about insurance is that it is useless until something actually goes wrong. While this may have been true in the early eras of insurance and underwriting, insurance today is mandated by law in several everyday aspects of life, such as driving a car or a two wheeler. Frequently insurance also brings with it a tax exemption benefit commensurate with the value of the plan, so this is an additional inducement for people still fence-sitting about getting insured.
  7. Business Insurance is standard operating procedure In business, particularly in businesses more prone to certain kinds of risk, insurance can be either a game-changer or an enabler. International shipping would be severely hampered if it weren't for transit cargo insurance cover, for example. Insurance is at the core of business and commerce.
  8. If it is worth keeping, it is worth insuring Your precious belongings (jewelry for instance) are understandably, a cause of pride and joy to you. Insurance makes sure what is yours stays yours.

Malaysians have the advantage of availing of either conventional or Islamic insurance. Islamic insurance, known as Takaful, is is a type of insurance that complies with Islamic law, particularly the Shariah. Shariah prohibits certain concepts like interest (or “Riba”), uncertainty (“Gharar”), gambling (“Maisir”) and certain activities (called “Haram” or unclean as opposed to “Halal” or clean activities).

Takaful involves a group of participants who mutually guarantee (“Taawun” or mutual assistance)
each other against loss or damage. Each participant contributes a certain amount (or “Tabarru”) into a fund which is managed by a Takaful operator who operates using the Islamic concepts of Mudharabah (profit sharing) or Wakalah (agency). If any participant suffers losses or damages, the Takaful operator will disburse funds accordingly.

Any surplus remaining after the assisting of participants will be distributed amongst the participants. Takaful, thus operates both as a protection and as a profit sharing venture between the Takaful operator and the participants. Islamic Insurance is open to all, irrespective of religion. 

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