Insurance is the foundation of wealth preservation. Over time, cumulative exposure to risks from various hazards increases the likelihood of experiencing a single loss event. In this instance, the size of the loss event becomes a random draw from the fates which could result in financial ruin. Insurance allows for the pooling of risks amongst individuals exposed to the same risks at a cost that is shared by all policyholders in the form of premiums paid. Insurance companies pay a commission to broker or agent who sells the insurance product.
The insurance policy coverage amount should based on an assessment of the amount at risk to determine policy limits and any amounts which can be self-insured through policy deductibles. The types of insurance policies that can be purchased for coverage against the risk of loss include:
- Life Insurance
- Medical Insurance
- Disability Insurance
- Long Term Care Insurance
- Employer Sponsored Group Insurance
- Property and Casualty Insurance.
Risk of loss from premature death; lost wages from disability; injury at work; auto accident; fire; hurricane; unintentional injury to others could all result in financial ruin. Failure to insure against these risks can result in a journey lost in the pursuit of your True North.
