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Why We Need Insurance And Loans As Individuals

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THE DIFFERENCE BETWEEN INSURANCE AND LOANS

Loan is anything borrowed usually money that is expected to be paid back with specified interest after a specific period of time. While Insurance is an agreement between individual and a company or the state for protection against an unexpected loss.

In Insurance the company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. Insurance and Loans is needed depending on the situation.

While loans are secured to help take care of immediate financial needs, Insurance is use to protect yourself against possible future loss.

Read Also: The difference between Insurance and Assurance

WHY WE NEED INSURANCE AND LOANS

There are multiple reasons why we need Loans and Insurance. But the summary is that We need Loans and Insurance because Lona helps us to acquire properties and invest or grow our business. While Insurance serves a security for all our works. It keeps our work secure against unexpected loss.

MAJOR DIFFERENCES BETWEEN INSURANCE AND LOANS
  1. Loans are usually to take care of immediate expenses while Insurance is more focused on uncertain events i.e the future.
  2. Interest rate is associated with Loan but Insurance is different.
  3. Insurance company pays you depending on the agreement entered between you and the company. You pay the Loan company depending on the Loan you secured and interest rate agreement between you and the Loan company.
  4. The purpose of loan is to help you get or acquire things. But Insurance is a security against unexpected loss.
  5. You decide how to use a loan you secured. For example you might secure a personal loan but end up using it for business. Or you Might secure an Auto Loan and sell the car to buy a house. Insurance is different as Vehicle insurance will only cover your vehicle and no more.

Read Also: Follow These Five Tips To Live A Better Life In 2019

MAJOR SIMILARITIES BETWEEN INSURANCE AND LOANS

Aside from its many differences there are also some key similarities between Insurance and Loans.

  1. There is Auto Loan and there is Auto or Vehicle Insurance
  2. There is Business Loan and there is Business Insurance
  3. Both are finance related. While one is use to get money and properties the other is used to protect against loss of those properties acquired.
  4. They both help in wealth creation.
  5. Both are a nice way to make good financial plan.

So you can see that both Insurance and Loans are very important to everyone. If you need a quick cash then Loan is your best option. If however you want to secure your property then Insurance is there for you. There are lots of companies and banks that offers both Insurance and Loan services. All you have to do is get in touch with a legit one and if the policy and terms are OK with you then proceed to get either a loan or an insurance.

 

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