An insurance policy is vital for the purpose of transferring insurable risk from oneself to a risk carrier i.e. an insurance company. All of us are exposed to risk in our day to day lives, however, our level of awareness regarding our situation and the method of managing risk is generally low.

Risk of hospitalization costs, accidents at home or in motor vehicle, damage to our homes, burglary and loss of property, income interruption for the family as a result of demise of breadwinner(s) are common insurable risks to which individuals are exposed. Businesses are exposed to fire and related perils risks, income interruption as a result of fire, damage to property among others.

If a risk is not transferred to an insurance company then the individual or firm assumes the risk themselves deliberately or by default and in the absence of setting aside sufficient funds to deal with the eventuality of the risk there would be danger of detrimental financial consequences arising.