Question

Bruce has just graduated from college and decides that instead of paying for insurance, he'll work on building up his emergency fund. this way, if something goes wrong, he can just pay for it using cash from his emergency fund. why is this a bad idea?

Answer 1

This is a bad idea because an occurrence such as accident can strike at any time and be quite expensive which he may not be able to afford.

What is Insurance?

This is defined as a means of protection from financial loss and helps to reduce different forms of risk.

Deciding to set up an emergency fund is not ideal as the unexpected occurrence could lead to him not being able to cater for it at that point in time due to less funds being saved.

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