Why is insurance important?

Insurance is important primarily because it protects you from certain financial losses. By transferring the risk of financial loss to an insurance company, you ensure that you have financial support in case of unexpected events, such as accidents, illnesses, natural disasters, or theft. This protection is crucial for maintaining your financial stability, as it can cover expenses that may arise from these unforeseen circumstances, allowing you to recover without suffering significant financial harm.

The correct choice highlights the core purpose of insurance — providing a safety net against specific risks, which can otherwise lead to overwhelming costs. In contrast, the other options address aspects that don't capture the fundamental role of insurance; minimizing spending is more about budgeting and financial management. Protecting personal relationships is more related to the emotional aspects of financial wellness rather than the financial mechanisms themselves. Lastly, insurance does not guarantee profit on investments, as its main function is risk management rather than investment growth.