When people say I don’t need Insurance policy and I ask why, their responses most times are mostly in consonance with these lines; …”Because insurance is not effective in Nigeria”, “Because I already have my savings and investments in motion”, “Well, I have my retirement money with pensions provider sorted out”, and some will say, “I prefer to keep my money where I can see them and have access to them anytime”…. Amongst other reasons.
I totally agree with them and most of their reasons are valid. However, when I pose a question to them, and I ask – in the event of unplanned negative occurrence or outcome, let’s say, you bash someone’s car, or your shop caught fire, or you encounter an accident and sustain some injuries or permanent disability, what do you think will happen then?
Their responses are ; “ Well if that happens, I will use my savings to solve the problem”, “ I will borrow to solve that problem and then pay back later”, some will as well say, “well I will start life afresh if my business/Shop catches fire and I lost all my goods”. But do they know that with an insurance cover; which is a plan against anything called risk, those who would have intend starting life afresh in the case of a business loss by fire or burglary, wouldn’t have.?
WHAT IS A HEDGE?
According to Merriam-Webster dictionary – “A hedge represent a means of protection or defence (as against financial loss). It also, means to protect oneself as from losing or failing by a counterbalancing action”- I love this part better!
From the above definition of a hedge, it is then safe to say that, without any form of HEDGE to our income, we automatically expose ourselves(income) to loss. We become vulnerable to failure due to our counterbalancing actions in the event of a negative outcome.