What Are the Benefits of Insurance to the Public?

Insurance comes in many forms, including health, life, property and auto coverage. Each of these forms has different advantages, but every insurance type carries the same general benefits to the public: emotional, social and financial. Some of the benefits of insurance extend to all members of a society, not just those who hold insurance policies.

Decreased Likelihood of Financial Hardship

• If you do not have insurance and disaster strikes, you can face thousands or even millions of dollars in court, medical and asset replacement/repair costs. Most people in the United States are not prepared for such financial obligations. Insurance, therefore, protects you from financial loss and creates stability in difficult times. This stability translates to the ability to continue to invest in the economy, which stabilizes the financial situation of the entire country and greatly influences foreign trade relationships.

Peace of Mind

• Not having insurance sometimes means you have to dip into assets to meet expenses, such as for legal bills in the event someone sues you in a car accident. In some cases, a lack of insurance puts loved ones at risk -- for example, with no medical insurance, a spouse or child may not get the treatment they need. This creates worry and stress. With insurance, you know that you have a cushion on which you can rely, giving you peace of mind.

Investment

• Lenders do not provide funds and support for individuals and businesses unless they have some evidence that their investment is safe because they do not want to risk financial loss. Insurance shows lenders that they have some guarantee of getting money back in the event of a disaster. This makes it more likely that the lender will invest because they see you as less of a liability.

Risk Awareness

• Insurance companies sometimes require assessments as part of the process for getting coverage. For example, if you're buying homeowner's insurance, your agent may point out the risk of having tall trees close to the dwelling or not having an up-to-date electrical system. Other professionals also spot risks. For example, some companies require a physical to get medical insurance. The physicians who perform these physicals can spot medical problems, such as high blood pressure or other diseases. Awareness of the risks you have lets you plan ahead.

Sense of Responsibility

• When you take out an insurance policy, you assume responsibility for the situations and financial issues that create the need for the policy. You do not expect other members of society to foot your bills. This personal sense of accountability keeps you independent and reduces the burden you put on others.

Information

• Insurance companies organize information for policy holders and prospective clients. For example, they collect statistical data that show which people are at the greatest risk or what the likelihood of a particular disaster is. They often provide this information to the public through their websites, agent consultations and promotional documentation. This information keeps the public informed about their risks and raises awareness of issues.

Other Projects

• Insurance companies do not spend all of the money people pay in premiums. Often, they reinvest it in various community projects. The monies provided by the insurance companies fund many things, from new construction to scholarships.