Never Buy Insurance Before Reading This My Money – 21 hours ago

Jakarta, CNBC IndonesiaHave you ever thought that you feel like you are losing money because you have insurance that you never use at all? Whether health, property or life insurance.

In essence, insurance is a risk management product that is purchased so that our finances are not drained when we face unexpected disasters. It is clear that buying insurance is not intended to expect rewards or profits in the form of cash.

Buying insurance is like paying security officers who guard our buildings or homes from criminals. Please ask yourself if you have a security guard, would you lose his salary if your house wasn’t burglarized?

The answer to the question in the paragraph is, no. As long as, what you pay doesn’t disrupt your monthly cash flow.

But what happens if because of paying insurance premiums, you find it difficult to buy food ingredients with balanced nutrition, be able to pay debts, and even set aside money for investments? The following is the explanation.

Insurance is not a basic need

It’s good for you to have insurance, but remember that insurance is not a basic need that must be met immediately. The real basic needs are clothing, food and shelter.

It is appropriate for you to make clothing, food and shelter a need that must be met first before insurance.

Insurance is purchased after you are able to manage your finances

When you can be said to be competent in managing finances, in the sense of not having expenses that exceed your income, then you can be said to be worthy of buying insurance.

As said above, insurance is not a basic need and is complementary.

And the order of having insurance starts with health insurance first, before you buy life insurance (for those who have dependents) or property insurance.

If you feel that your income is limited, then paying BPJS Health is a good idea to have good financial protection standards.

Insurance is obtained after having emergency funds

One of the most basic forms of financial protection is an emergency fund. Emergency fund savings are savings that we allocate to face urgent matters.

What happens if you lose your income and don’t have an emergency fund, but have health insurance whose premiums are regularly paid annually?

Of course, health insurance will not be able to disburse money to help you survive. You are even forced to go into debt to live.

That is why you must have an emergency fund first rather than insurance.

Buying insurance shouldn’t be expensive but don’t be cheap either

The more complete the insurance package and protection features, the more expensive the premium. Likewise, if it is too cheap then it is feared that the protection will not be optimal.

Considering that insurance is an expense, not a savings or investment, the premium you pay must be in accordance with your capabilities and the protection is appropriate.

The first, most basic and must-have insurance is health insurance. If your budget is not too big, then buy inpatient insurance first or pay your BPJS Health regularly.

There are no standard rules regarding how much funds you should allocate for insurance. However, use a maximum reference of 15% of income, so as not to overbudget.

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