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By: Danette Mckay
Insurance is important there is no doubt about it but like many other things in life having too much of it is not necessarily a good thing though with insurance having too much is better than having too little.

People are divided into two groups. One group is comprised of people that think that nothing bad will happen to them. They choose to ignore danger assuming it can only happen to other people or if it will happen it will be in a very long time and they will find a way to somehow cope with it. This group treat insurance as something the government forces them to buy for example you can not drive a car without insurance. They usually will buy the cheapest insurance allowed that provides the minimum limits. They would also just buy mandatory insurance as they see insurance as a total waste of money and time. This group of people is extremely sensitive to the insurance policy cost as they look at any payment paid toward insurance as money lost.

The other group is of people that think that everything bad that can happen will happen to them. They are afraid from the worst and want to be sure that in any situation that arises that will be adequately covered. They prefer to know up front that they have a safety net for whatever bad circumstances they encounter. This group tends to buy insurance with the maximum possible limits. They also tend to buy many insurance products most of which are not optional insurance policies. This group of people is not sensitive to the insurance policy price as they are willing to pay almost anything to feel they are covered against what they think is inevitable.

Most people fall in between these two extremes. They do of course purchase the mandatory insurance but they tend to opt for limits that are a bit higher than the minimum set in the law but they make an educated choice that compromises cost with the benefits and limits. They also tend to buy some extra insurance that is not mandated by law but they do that only when they feel it is a smart thing to do and that the cost justifies the policy. For example many people choose to buy life insurance once they get married and have kids. The reason is that at this point they want to provide their family with a safety net should something happen to them in the future. The price for such a policy is usually pretty low while the benefit is real.

The first group is indeed right in the sense that having too much insurance is a waste of money. For example a single young person without dependents should not pay for life insurance as there is no benefit. Some people usually those included in the second group do buy such life insurance even when they are single and even if they do not have any dependents. They justify it by saying that getting the insurance at a young age when they are still perfectly healthy is cheaper and maintaining the insurance guarantees lower policy fees for the future. They forget to calculate all the years they paid for that insurance for no reason which add up to more than any higher premium they might incur in the future.
Danette Mckay writes about this and many other subjects. Read more about get them
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