LIMITATIONS OF INSURANCE
There is a popular dictum that “anything that has an advantage also has disadvantages”. Despite the innumerable benefits and advantages associated with insurance, there are still some loopholes fraught with it. We shall deliberate on some of those disadvantages now.
Insurance leads to negligence as the insured feels that he/she can be compensated for any loss or damage.
Many people develop an “anything goes” attitude once they have an insurance package. The level of carefulness and mindfulness of many decreases as they feel that the insurance company will surely bear the brunt of their damages. These negative attitudes of laxity and carefreeness make the entire arrangement one of mockery and jest.
Insurance companies do not make the compensation promptly on the maturity of the policy or for the financial losses as the expectation of the insured.
This has ever remained the major concerns of many. Insurance companies are perceived as being unfaithful to time demands and urgency. This has turned many off and discouraged others in grabbing insurance packages. This is a major limitation
It may lead to crimes in the society as the beneficiaries of the policy may be tempted to commit crimes to receive the insured amount.
In the same order, many take to precarious activities just to ensure that they redeem the amount insured. Crimes are on the increase in today’s world.
Although insurance encourages savings, it does not provide the facilities that are provided by the bank.
In this regard, financial institutions such as banks remain outstanding. No matter the measures taken by insurance companies to enable individuals to save up, they can never equate with the services offered in the banking sector. Many still prefer to be customers to banks rather than to insurance companies
Lack of Trust
Finally, there are also people who lack trust in the huge corporations and they don’t want to give money away to a company that could collapse at any moment. For example, if there was a major financial collapse like the one we saw in 2008, this gave so many bad notions about insurance companies and their likes.
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With the right insurance company, these limitations could be reduced to the barest minimum