A Business With a Long History

John’s carpentry shop was the best built and best stocked in his community. It was his pride and joy. But one night fire broke out. In a few hours, his beautiful shop was reduced to smoldering ashes.

EARLIER, John had thought about buying fire insurance with some of the funds that he put into building his shop. However, he reasoned: ‘I’m very careful. And if I never have a fire, insurance will be a waste of money.’ But there was a fire. If John’s shop had been insured, very likely he could have rebuilt it. Without insurance, he could not.

What Is Insurance?

Insurance is not necessarily an investment from which one expects to get one’s money back. Nor is it gambling. A gambler takes risks, while insurance offers protection against risks that already exist. Insurance is a way to share risk with others.

Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. About 3,500 years ago, Moses instructed the nation of Israel to contribute a portion of their produce periodically for “the alien resident and the fatherless boy and the widow.”—Deuteronomy 14:28, 29.

The Origins of Insurance

Insurance has existed for thousands of years. A form of credit insurance was included in the Code of Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. To finance their trading expeditions in ancient times, shipowners obtained loans from investors. If a ship was lost, the owners were not responsible for paying back the loans. Since many ships returned safely, the interest paid by numerous shipowners covered the risk to the lenders.

It was likewise in a maritime setting that later one of the world’s most famous insurance providers, Lloyd’s of London, was born. By 1688, Edward Lloyd was running a coffeehouse where London merchants and bankers met informally to do business. There financiers who offered insurance contracts to seafarers wrote their names under the specific amount of risk that they would accept in exchange for a certain payment, or premium. These insurers came to be known as underwriters. Finally, in 1769, Lloyd’s became a formal group of underwriters that in time grew into the foremost market for marine risks.

Insurance Today

When people buy insurance today, they are still sharing their risk. Modern insurance companies study statistics that show the frequency of past losses—for example, losses from shop fires—to try to predict what losses their clients will experience in the future. The insurance company uses the funds paid by many clients to compensate the clients who suffer losses.

Do you need insurance? If so, what kind of insurance is right for your circumstances? And whether you have insurance or not, what precautions can help you to cope with life’s risks?

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One of the world’s most famous insurance providers started in a coffeehouse

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Courtesy of Lloyd’s of London

Do You Need Insurance?

IN SOME lands certain kinds of insurance are compulsory. In others, most kinds are practically unknown. In addition, the cost of insurance and the type of coverage provided vary widely from country to country. But the fundamental principle of insurance—sharing risk—remains the same.

Naturally, the more property a person owns, the more he has to lose. Similarly, the more family responsibility a person has, the greater the impact if he or she dies or becomes physically disabled. Having insurance can alleviate one’s concern about the possibility of suffering a loss of property or a disabling accident.

Yet, is it wise to spend money on insurance even though a claim may never be made? Well, is keeping a spare tire in the car a wasted investment, even if the tire is never needed? The sense of security to the car driver may make the expense of the extra tire worthwhile. While financial compensation cannot make up for certain losses, it may compensate for other losses.

What types of loss do insurance policies cover?

Types of Insurance

Much of the insurance purchased by individuals falls into the categories of property, liability, health, disability, and life insurance.

Property insurance: Insuring against the loss of property—home, business, car, or other possessions—is among the most common forms of risk management. This is the insurance that John, mentioned in the preceding article, decided not to buy for his carpentry shop and tools.

Some home-insurance policies include coverage of certain items inside the home. If you buy this type, it is wise to make an inventory of your insured household possessions, if possible including photographs or a videotape. This inventory along with any appraisals or purchase receipts for the items should be kept in a safe location outside the home. Having these records could make settling a claim much easier.

Liability insurance: Anyone who drives a car, owns a home or other real estate, operates a business, or employs others runs the risk of liability for an accident. And that accident may result in property damage or injury or death to another person. The car driver or the owner of property or a business may become liable to pay for property repair or for the medical treatment or even the pain and suffering of another. In many countries employers and drivers are required by law to carry liability insurance to help pay these expenses. Even where insurance is not a legal requirement, a driver, property owner, or employer may be held legally or morally responsible to help victims of an accident or their families.

Health insurance: Many countries have some form of state-sponsored insurance that provides such benefits as pensions for seniors and medical care. Even where this is the case, however, such insurance may pay only a portion of medical expenses or may pay for only certain ones. Some individuals, therefore, obtain additional private insurance to help them pay the remainder. In many places workers may receive health insurance as a condition of their employment.

Some health-care plans, including managed care arrangements and health maintenance organizations (HMOs), provide comprehensive medical care for a set monthly or annual fee. These organizations endeavor to lower costs by providing less-expensive medical care and by promoting preventive medicine. However, in an HMO, a patient’s choice of doctors or treatment may be more limited than with traditional health insurance.

Disability insurance and life insurance: Disability insurance provides some income if a person is injured and cannot work. Life insurance provides financial assistance to a person’s dependents in case of his or her death. Such insurance has enabled many families to pay off outstanding debts and carry on their routine of life after the injury or the death of their main breadwinner.

Finding Reliable Insurers

Insurance is based on the principle of paying money now for financial protection in the future, so it is not surprising that the insurance industry attracts more than its share of swindlers. This is true in developed as well as developing economies. Therefore, one is wise to beware of so-called low-cost insurance and to be alert to any other questionable insurance scheme. Too many hopeful buyers have ended up with nothing when such companies failed to pay on their policies—or just vanished overnight!

So, as with any other important purchase, comparison shopping is wise, and it often saves money. For instance, some companies offer lower rates on health insurance to nonsmokers and on car insurance to those who have passed driver-education courses. But how can a potential buyer find reliable insurance?

A first step can be to find out what others have experienced with various insurance companies and agents. Friends and neighbors may know a company’s reputation for service or an agent’s reputation for integrity and personal concern. It is also good to stay alert to news reports indicating which insurance companies may be having problems.

Additionally, a company’s record and financial standing may be checked by consulting insurance rating guides at a library or a bookstore or on the Internet. These can provide the answers to such questions as: Is the company financially secure? Has it been in business successfully for many years? Is it known for handling claims quickly and amicably?

Insurance rating guides, however, should not be considered infallible. One long-established, multibillion-dollar insurance company had to be taken over by the government only one week after it had been rated as superior in a well-known handbook!

Role of Insurance Agents

An insurance agent is normally committed to a particular insurance company. A broker, or independent agent, may consult various companies to find the best insurance available for a given price. Both need to maintain a good relationship with clients in order to keep their business. When an insurance agent is trustworthy and concerned, he can be of great aid to his clients.

First, a good agent or broker can help a client to select appropriate coverage from the seemingly endless list of insurance options. He will also explain the details of the policy to his client. As many well know, insurance policies are notoriously complicated. The president of one insurance company admitted that he did not understand parts of his own homeowner’s policy!

An agent’s explanation can help the client to avoid unpleasant surprises. For instance, most property- and health-insurance policies have a deductible. This is a set amount that the insured person must pay—say, for car repairs or medical bills—before the insurance company pays its share of a claim. The agent can also become his client’s advocate with the insurance company in case the client has difficulty obtaining a settlement.

Insurance and Christians

Does a Christian who trusts in God’s help and anticipates the end of the system of things need insurance? Back in the year 1910, some posed this question to Charles Taze Russell, editor of the magazine now known as The Watchtower, companion magazine to Awake! Russell acknowledged that the Bible foretells the end of the present economic system, adding that personally he carried no life insurance.

“Nevertheless all are not situated alike,” Russell observed. “A father having dependent wife and children—if the latter be of tender years and unable to make their own living—has some responsibility for them.” (1 Timothy 5:8) A man might set aside funds to provide for his family, Russell noted. “But in case he could not do this, he might be able to discharge his duty toward them through the medium of life insurance.”

One responsible for a family might also provide health, disability, and other forms of insurance for its members. Many single individuals carry insurance to facilitate obtaining needed services as well as to protect themselves from going into debt in case of accident or illness.

Honesty comes into play in connection with insurance. A true Christian would certainly never deceive an insurance company, either when filling out an insurance application or when making a claim. (Hebrews 13:18) He or she would keep in mind that the purpose of insurance is to compensate for loss. It is not a lottery ticket—a chance to live a life of luxury.—1 Corinthians 6:10.

Christians obey all laws related to such requirements as obtaining insurance. Where the law states that they must have proper insurance to operate a business or drive a car, they comply. (Romans 13:5-7) Honesty and practical wisdom also dictate keeping up with the payment of premiums. If payments are not made, the company may cancel the policy and not pay claims. It is prudent to verify payments periodically by checking with the company directly and to retain written proof of payment, such as canceled checks.

Whether insurance is available where you live or not, there are basic precautions that can help you to avoid loss and thus spare you and your loved ones pain that no insurance claim can erase. We will next consider some of these precautions.

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A trustworthy agent can help you to make decisions about insurance

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Many carry insurance, whether required to by law or not

Insurance That Everyone Needs

WHETHER you live where insurance is common or where it is nonexistent, there is a type of insurance that everyone can and should obtain. Since “insurance” can refer to “a means of guaranteeing protection or safety,” how can you avail yourself of that kind of insurance?

You can do so by taking practical steps to reduce the risks to which you are exposed. The Bible observes that “time and unforeseen occurrence” affect everyone. (Ecclesiastes 9:11) Yet, by not taking unnecessary chances, the possibility of suffering injury or loss is reduced.

Think of the Future

Showing practical wisdom is a protection. During times of relative economic prosperity, it may be possible to put aside something for a rainy day—a time of need. In ancient times the God-fearing man Joseph distinguished himself as “a man discreet and wise” by saving up foodstuffs for the whole land of Egypt during a time of plenty. When the land was later struck by famine, Joseph’s actions provided for not only the Egyptians but also his own family.—Genesis 41:33-36.

Being modest in our consumption can also serve as a protection. We can save money and reduce stress by not constantly pursuing the latest gadget, fashion, or entertainment—a course that adds little or nothing to our genuine security. In fact, as already noted, the more material possessions a person has, the greater the possibility of suffering theft or loss.—Luke 12:15.

Be Safety Conscious

We can reduce much of the risk in life by simply being safety conscious. How many tragic car accidents could be avoided if everyone drove carefully and at safe speeds? Think, too, of how many lives would be spared if no one drove while overtired or after drinking alcohol. There are also other driving risks that are within our control.

For instance, in several countries the law prohibits use of a cellular telephone while driving. One study concluded that such use increases the risk of an accident fourfold. That is as much increase in risk of accident as is driving with a blood-alcohol level of 0.1 percent, the point at which in many places a person is considered legally too drunk to drive.

The regular use of seat belts also reduces the risk of death for drivers and passengers. But never assume that having such safety devices as seat belts and air bags or having insurance makes it all right to take chances. Research shows that such thinking leads to more accidents.

Being safety conscious is also good insurance in the home and in the workplace. Are your living and work areas neat and free of hazards? Take a look around. Is there anything in a walkway over which people could trip? Are sharp objects or hot appliances—stoves, heaters, irons—located where people could get cut or burned? Are there accumulations of paper or other flammable materials? Be especially alert for hazards to children. For example, are alcoholic beverages and all poisonous cleaning products out of the reach of small children?

Take Care of Your Health

By being health conscious in a reasonable way, you can lower your risk of illness. In this regard, knowledge can serve as a form of insurance. Be aware of hazards to your health, and take prompt action when health problems develop. More important, learn how to maintain your health and that of your family. Remember the old saying: “An ounce of prevention is worth a pound of cure.”

Awake! has long provided information that encourages people to live in harmony with Bible principles and thereby avoid habits and life-styles that are damaging to health. For example, among the many subjects considered in Awake! have been the importance of cleanliness, a proper diet, sufficient sleep, and regular exercise as well as the need to control stress and the pace of life.

A Vital Kind of Insurance

In this imperfect world, insurance can be a very practical tool, but no insurance policy can completely protect us or fully compensate for our losses. Yet, whether insurance is available to them or not, there are people who are confident that they will not be left on their own. Why? Because when disasters strike, genuine followers of Jesus Christ—those who serve his Father, Jehovah God—do what they can to ease the burdens of one another.—Psalm 83:18; James 2:15-17; 1 John 3:16-18.

Furthermore, Jehovah himself promises never to abandon his faithful servants. A Bible psalmist wrote: “In case my own father and my own mother did leave me, even Jehovah himself would take me up.” (Psalm 27:10) As the Source of life, Jehovah can resurrect those who die, and according to the Bible, he has empowered his Son, Jesus Christ, to raise the dead. (Psalm 36:9; John 6:40, 44) Yet, God’s Word indicates that not everyone will be resurrected. (John 17:12) How, then, can we ensure that we are remembered by God in the resurrection?

In his famous Sermon on the Mount, Jesus spoke, in effect, about the most reliable form of insurance. He said: “Stop storing up for yourselves treasures upon the earth, where moth and rust consume, and where thieves break in and steal. Rather, store up for yourselves treasures in heaven, where neither moth nor rust consumes, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”—Matthew 6:19-21.

Often people think of accumulating a nest egg in the hopes that it will ensure them a more comfortable life when they are older. Jesus, however, identified a more secure form of insurance. Its value is inestimable, and it will never fail! He explained: “This means everlasting life, their taking in knowledge of you, the only true God, and of the one whom you sent forth, Jesus Christ.”—John 17:3.

By obtaining accurate knowledge of God and his Son and applying what we learn in our lives, we will build up a good record with God. (Hebrews 6:10) Both the apostles Peter and John, basing their beliefs on the teaching of their Master, Jesus Christ, emphasized that the present system of human rule will end. Yet, John explained: “He that does the will of God remains forever.”—1 John 2:17; Matthew 24:3, 14; 2 Peter 3:7, 13.

We can be confident that if we serve God and die, he will resurrect us or that if we live to the time when he brings this system of things to its end, he will preserve us alive into his righteous new world. Indeed, God’s promise is to “wipe out every tear from [our] eyes” and to make “all things new.” (Revelation 21:4, 5) Serving God and placing trust in his promises is truly the best insurance of all. And it is available to everyone.

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Being conscious of safety and health is a form of insurance

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Learning about God and doing his will is the best insurance for the future