Options on an underlying can only truly be hedged using other options on the same underlying. Trying to create a hedge with just cash and the underlying (or with “similar” underlyings) will leave the trader exposed to errors that can blow up the portfolio.
I suspect this applies to other domains as well. Insurance in the wrong form can leave residual risk that will never really go away. For example, no amount of cash in the bank will completely hedge a person from disrespect. Only the irrefutable knowledge that he is respected by others can act as a true hedge. Sure, cash in the bank can help decrease exposure to such disrespect, but conditional on having received disrespect, cash does nothing for you.
This is relevant to building forms of insurance against various scenarios. A parallel market may exist with which you think you can buy insurance against a specific scenario, but if the payout is in the wrong form, it may not be a true hedge. It is best to strive to hedge with the same numeraire.
A final example to close off - A good work life/career will not hedge a poor social life, or vice versa.