When there is risk, it means there is potential for a loss. There are five ways to deal with risk.
- Avoid the risk
- Retain the risk
- Transfer the risk
- Share the risk
- Reduce the risk
Insurance is an important component of any financial plan. An insurance program should be part of your plan to protect against the risk of unexpected financial losses. With insurance, you transfer the risk to another party. That party bears the risk (potential loss) that you are protecting yourself against. Without insurance, you retain the risk (potential loss) within yourself.
However, there are so many types of insurance, how do you know which one to buy? The best insurance is the insurance you need. Hence, you need to first understand what your risks are. Then you can seek for the suitable type of insurance to transfer your risk. A Financial Adviser represents you to source for the suitable type of insurance based on your needs.