Many people don't understand the most basic concept of insurance so here is the clearest way to define it:
Insurance is a means to protect you from a loss that you cannot afford to bear independently.
There you have it. Now, think about all of the bad things that can happen to a person. They could get sick, become disabled, have their property damaged or altogether destroyed, have their identity stolen, be put in a nursing home, be sued, outlive their retirement nest egg, lose money in the stock market, and all of us will surely die.
Fortunately, we have insurance to address all of these risks and being prepared for these issues before they arise is one of the cornerstones of building wealth. If you don't believe you need insurance, don't forget that the number one reason for bankruptcy is unpaid medical bills. The overwhelming majority of these bills are a direct result of being uninsured.
