Insurance is often discussed as something that is complicated and difficult to understand… Let’s fix that!
Remember what insurance is for: Risk Transfer!
When you think about the things you could insure, several things might come to mind: Home, auto, life, and personal property. There are different types of risk associated with each of these.
Some risk you might want to:
· Retain (the risk is infrequent in occurrence and minimal in scope)
· Avoid (the risk is frequent in occurrence and the significant in scope) – ex. lifestyle choices such as smoking that leads to premature death
· Transfer ( the risk is infrequent in occurrence but significant in scope) – ex. Death of a loved one.
When you buy insurance you are transferring the risk to the insurance company!
When you buy insurance remember the risk you are trying to transfer and the dollar value of that risk
· Your annual premiums should be less than the risk value for it to make sense!
· It has to be an actual risk for you to want to transfer it.
What are the most important insurance policies that most people should have?
· Term Life Insurance
· Long term disability – much more likely to be disabled than to die
· Homeowners/Renters Insurance
· Auto Insurance – it’s the law
· Health Insurance – it will be the law
· Personal Umbrella Policy
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