What Is Risk?
A risk is the chance of an event resulting in financial loss – for example, something valuable getting stolen, damaged, destroyed or lost; or a person getting injured or dying.Risk management is the identification, assessment and prioritization of followed by coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate events. A common resource applied is insurance.
What Is Insurance?
Insurance, is a form of risk management primarily used to hedge against the risk of a contingent loss, or equitable transfer of the risk of a loss from one entity to another, at a defined premium by the insurer who is willing to take the risk of a potential loss.
- It is a mechanism for spreading risks or sharing losses of the few among the many. Individuals (policyholders) pay a fee (the premium) to an insurance company (insurer) in return for a benefit in the event of a loss that might occur as a result of certain agreed events (a claim).
Insurance Can Give You Peace Of Mind
- Helps you manage the unexpected and stay financially stable.
- Protects you against having to pay the full cost of a loss.
- Means you don’t have to dive into your savings or investments, or borrow money, or ask family or friends or others for financial assistance, or sell assets to pay outstanding debts and day-to-day living expenses.
- Helps protect your family or other dependents from the financial consequences of your death.
- Gives you confidence that you and your family will be taken care of in times of need.
- Premiums on some insurance policies are tax deductible.
Insurance policies can be tailored to provide cover relevant to your needs.
What Insurance Do You Need?
- Everybody’s circumstances are different. The amount of insurance cover you need will be influenced by your level of income, your assets, your liabilities and your personal circumstances, such as whether you are married, have children or other dependents.
- A financial adviser will be able to help you to determine which insurance will be suitable your needs and circumstances.
Thus, the term insurance planning arises.
The Insurance Planning Process
- Identify risks and assess the amount of insurance required according to your specific situation.
- Determine the most appropriate insurance by accessing a diverse range of flexible insurance options, such as Life insurance, disability insurance, critical illness insurance and long-term care.
- Then survey and choose for the most suitable insurer that can provide the optimal benefits to your requirements.
- Regularly review your insurance needs as you progress through life.