THE RISKS OF NOT INSURING

It really boils down to what type of risk we are prepared to undertake on ourselves. Risk could be categorized as:
Critical: an occurrence would have very serious financial consequences, possibly leading to bankruptcy
Material: an occurrence would have serious financial consequences, certainly resulting in a reduction in standard of living
Minor: an occurrence would have little financial consequences, some minor loss of income or manageable expenses

An individual or couple will have a maximum acceptable loss which is the maximum amount of financial loss they could withstand without causing unacceptable financial consequences. This maximum acceptable loss may be equal to the amount of the risk or it may be less.

The purposes of risk management are:

• To reduce the severity of a risk and
• To reduce the frequency, or how often a loss might occur, if possible

The risk control strategies which can reduce the frequency are:

• Risk avoidance which is avoiding any activities or situations which have a risk of death or disability
• Risk reduction which is taking precautions when engaged in activities or situations which have a risk of death or disability

The risk financing strategies which can reduce the consequence of death or disability are:

• Risk sharing which is entering into an insurance arrangement whereby the risk of death or disability are pooled by having those who affected by the death or disability supported by payments from those who are not and
• Risk retention which is accepting the risk of death or disability, rather than implementing one of the other risk management strategies

From time to time we come across those that do not want to insure themselves against death or disability - these are the ones that are retaining the risks. And that is something, we definitely do not agree with. At the end of the day, we want to insure ourselves against this possibility and that is why we insure ourselves.

A life insurance needs analysis is an analysis of an individual's or couple's need for income in the event of a death and the amount of capital required to provide that income. It is intended to determine how much income would be required in the event of a death and how much would be available from earnings, savings, and insurance plans. A life insurance needs analysis should also consider other capital needs to pay income taxes, other debts, and final expenses.

Likewise, a disability needs analysis is an analysis of an individual's or couple's need for income in the event of a disability. It is intended to determine how much income would be required in the event of a disability and how much would be available from earnings, savings, and insurance plans.

The purpose of any insurance is to protect you from suffering financially if a certain event occurs. The chance that you will die in the next year is low, but the financial consequences are high. If you were to die, become disabled or become critically ill, would you and your family suffer financially?