22 July, 2020

Quora Answer: What are the Benefits of Insurance?

The following is my answer to a Quora question: “What are the benefits of insurance?  How do insurance deductibles work?

Insurance mitigates against the cost of loss.  It is a means to protect wealth, to create an immediate estate upon death, or even as a means to wealth acquisition and growth, when used as financial instrument.  It is not about merely buying a policy, but how you structure it within your existing portfolio of investments, and how you use it.

A deductible is a prearranged amount, above which, the policy pays out in the event of a claim.  This may be a specific number, or a percentage, depending on the policy.  For example, if your deductible is $500, and you make a claim of $1,000, the policy pays out only $500.



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