What do we mean by “optional insurance”?
Some types of insurance are mandatory - there are either legal requirements to have it or companies place it as an essential requirement. For example, you need to have car insurance to legally drive your vehicle on the road. Home insurance isn’t a legal necessity, but many mortgage lenders won’t hand out loans unless you agree to take out a policy.
On the other side of things, you have insurance policies that are not mandatory. You can either take them or leave them - it’s entirely up to you. This includes things like travel insurance, mobile insurance, pet insurance, and so on. All insurance policies require a premium that you either pay upfront, monthly, or annually. Sometimes, these premiums can be really high, leading many of you to ponder whether or not optional insurance is worth the costs.
Surely this is a big waste of money, right?
Not necessarily - and let us explain why.
You can tailor insurance policies to fit your budget
What a lot of people forget is that insurance policies are tailored to fit your budget. Even with something mandatory like car insurance, you can choose the level of coverage required. The same goes for everything else; if you want to protect something, you can find a policy that suits your needs and budget restraints.
As a result, you can protect the things you love - or things that are valuable - without spending a fortune. Is this a waste of money? It certainly doesn’t seem like it. What’s more, if you don’t make claims on your policy, the premium could go down the next year. In many ways, you’re rewarded if bad things don’t happen while being protected if they do.
The cost of dealing with problems is far greater
We often get put off when we see how much insurance costs. It almost feels threatening or overwhelming, so we avoid getting it. You only realize the true value of insurance when something does go wrong.
Take travel insurance - it’s optional and so many people neglect it. You can find affordable deals from companies like Generali, but even the most expensive travel insurance is worthwhile when something bad happens. Imagine you lose your suitcases or your hotel room gets robbed. Without any travel insurance, you have to face the consequences alone. You could’ve had a thousand-dollar laptop in your case, plus loads of other expensive items. Rebuying all of this stuff will cost an absolute fortune. Similarly, imagine your mortgage provider does not require you to have home insurance and you skip on insuring your property and its contents, but then a storm rolls in and your home suffers significant damage. In this case, you'll have to pay out of pocket for costly repairs to fix any damage. Contrastingly, however, if you have buildings insurance, you'll be able to make a Hail Damage Claim to your provider with the help of a reputable legal professional, securing yourself a payout to cover roof replacement and any other essential repair work.
As you can see from the examples above, even if you have to pay a few hundred dollars for insurance, it’s still far less than the cost of dealing with the problems without it.