An average Nigerian believes that God is watching over him, hence he has no need for insurance. Loss of any kind always happens to another person, but never to you. Time has shown that bad things indeed do happen to good people.
You have to ensure your assets to ensure the continuity of your journey to freedom. To attain financial freedom, you are basically building assets, assets that will generate enough cash flow to exceed your expenditure. It makes sense to insure your assets so that you do not suffer a loss that will put you back in the red.
Normally, you need insurance on all your valuables. Items that are important in maintaining your current standard of living that you will need to replace in the event of a loss.
Your assets include patents/intellectual property, investment real estate, performing stocks, and business systems, etc. These are items that put money in your pocket on a regular basis.
By insuring your assets, I mean protecting them from possible loss. It could be taking out insurance, intellectual property protection, or hedging against loss.
Avoid “Naked” Positions
Never invest naked. Have a backup plan for unforeseen circumstances. If you are buying an investment property, take the required insurance. Your health/life is an asset. Insure it. There are so many events you have no control over. You have to make plans for it.
Take the stock market for example. Most people know how to make money in a bull market, but there is despair when the bears take over. A savvy investor knows how to make money in all market situations. He does not go in “naked”. His position is always covered. He knows how to hedge against loss. He takes a long and short position. The long position enables him to take profits in a bull run, while the short position enables him to cut his losses when the bears return.
In each scenario, he determines his entry and exit positions. No surprises. Head or tail, he wins. This plays out again in options trading, where the sophisticated investor can win in up-and-down markets. In each case, he insures or covers his position, so that he does not get wiped out.
In your journey to financial freedom, you have to cover your positions. Hope is beautiful, but you must have plans on how to limit, eliminate or cope with adverse outcomes. That way, you can manage setbacks and are not taken by surprise.
Consult a Broker
Depending on which part of the planet you live, various classes of insurance are mandatory. However, you do not need the government/law to club you on the head for you to realize the need to insure your valuables, both assets, and liabilities.
An insurance broker should be a member of your team or think tank. There are various classes of insurance, to cover different scenarios. Do not expose yourself to unforeseen circumstances.
Imagine you are shipping your products across the Indian Ocean, and pirates hijack the ship. You don’t suffer any sleepless nights if the shipment was insured. There are classes of insurance to cover every situation. Fire, burglary, natural disasters, ill health, you name it. You may think that you are saving money by not insuring your valuables. Yes, you do save money in the short term. You have not considered peace of mind, and continuity of business, when the event eventually occurs. If you are in business, insurance costs are part of the cost of doing business, which gets passed on to the end user eventually.
Do not expose yourself. Get insured.
