Insurance
Insurance
Insurance is for catastrophic events, not for non-catastrophic events. A person does not need insurance to insure against the effect of non-catastrophic events. That is the key point to remember in order to save money on insurance and in order to protect you and your family better.
There are many events the effect of which a person needs to buy insurance to insure against. Examples include: death, being disabled, sickness, house damage, car accident, being sued in a lawsuit, paper money going to its commodity (which is paper or computer digits) price, etc.
The effect of each of the above events, a person may need to buy insurance to insure against. But whether to buy or how much to buy is a question whose answer depends on the financial situation of the person.
For example, if a person have enough disposable money, he may not need to buy collision insurance for his cars because he can afford to have no collision insurance - if his car is totaled, he just buys another car with his own money: he is his own car insurer.
Another example: if a person can afford to pay no more than $10,000 for each instance of repairing his house damaged by natural disaster and he is willing to bear the risk of having to pay $10,000 out of his own pocket, he can choose to have a $10,000 deductible on his house insurance; and that $10,000 deductible will reduce the house-insurance premium that he pays to the insurance company.
In the first example, the loss of the whole car is not a catastrophic event for the person and hence he does not need to buy insurance to insurance against the effect of the loss of his own car. In the second example, the loss of the first $10,000 out of his pocket is not a catastrophic event for that person and hence he does not to pay extra money to buy extra insurance to insure against the loss of the first $10,000 out of his own pocket.
In the case of the money going to its commodity (which is paper and nowadays is mostly computer digits) price which is almost zero, how do you insure against its effect? The best insurance against money losing its purchasing power is to buy commodities that can serve the purpose of money when the money that we currently use loses most of its purchasing power. Some commodities have served as money before and they include precious metals - gold and silver.
Exchange some of your current money (either in paper or in computer digits) for some gold or silver and you are buying some insurance against the effect of some of your current money losing its purchasing power. When the amount of that part of the money that you have exchanged into gold or silver has lost its purchasing power, the gold or silver will still maintain its purchasing power.
"Life, liberty and the pursuit of happiness", those 7 words contain powerful messages. There are strong "negative value" senses in those 7 words. The 3 concepts "life", "liberty" and "pursuit of happiness" are all in the negative sense which means "not unduely restrained". For example, "liberty" cannot be separated from gold and silver. When money is not backed by and is severed from gold and silver, liberty will be ultimately lost. There are underlying reasons and reasoning behind that statement. I will talk about that in a later piece about "gold".
Next: life. I will talk about life insurance. Life insurance does not insure a person against the loss of his life but insure his family against the financial effect of his losing his life. The best life insurance is term life insurance in most cases. The other forms of life insurace only make the life insurance salespersons richer. And term life insurance from the employer is not necessarily the best option. You can buy similar term life insurance product at lower premium independently on your own.
To be continued.
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