Insurance can be defined as a tool through which one protects themselves financially, against various risks inherent in the various facets of life and business. The arrangement is simple. The person who takes insurance gets into an agreement with an insurance provider to be paying the insurer given sums of money (called premiums) either as a lump sum or more commonly on a regular basis, with the understanding that should the event against which insurance policy is being taken come to pass, the insurance provider would give the person a pre-agreed level of financial ‘compensation.’
The modern insurance arrangement seems as a ‘sensible enough’ arrangement, an arrangement which every well thinking person would surely want to benefit from, and an arrangement which most people in generations before us would surely have wanted to have access to, were it available to them then. It comes as a surprise, therefore, that so many people remain without virtually any type of insurance coverage in spite of the benefits of insurance, leading to a question as to why so many people choose to live without insurance coverage, in this day and age.
Various factors can be advanced as possible reasons as to why people choose to live without insurance, its considerable benefits notwithstanding.
The first and most understandable reason as to why people choose to live without insurance coverage, its considerable benefits notwithstanding, is lack of money with which to buy insurance policy. However attractive a product might be, and however much one might want to have it, if they cannot afford it, there is nothing much they can do about it. Of course, considering the importance of some types of insurance policy (like health insurance) and the prices at which they are sold, it is only the people in the lowest income brackets who can advance lack of money as a possible reason for their not having any level of insurance coverage.
The second and rather common reason as to why many people are living without any sort of insurance coverage is lack of information about insurance and its workings. In this category are people, especially in the less developed parts of the world, who would certainly invest in adequate insurance coverage – if only they knew about the existence of such an arrangement, but who cannot for the simple reason that you cannot think of buying something whose existence you don’t even know of! Closely related to this is the situation where people who know about the importance and workings of insurance can’t buy any policy for the simple reason that they are living in jurisdictions where there are no such facilities, a situation in which many ‘intellectuals’ living in many poor and dysfunctional states find themselves in.
The third reason as to why people continue to live without any form of insurance is that of apathy towards insurance. This tends to be as a result of the bad press that some insurance providers who are, for instance, quick to take premium payments but very slow to part with rightful compensation claims once they fall due, leaving people with mixed feelings about insurance; which is supposed to help them at the most vulnerable points in life.