Insurance Planning

Most people view insurance in a negative light.  They often feel like it’s a big waste of money.  What they need to think about is risk.  

There are some risks you can keep for yourself, and some risks that should be transferred.

The risks you take when you make an investment are risks that you alone can shoulder.  Other risks can and should be transferred over to an insurance company. 

Insurance companies have their risk spread out over millions of people, so they are in a better position to take on your risk.  They have studied the likelihood of any possible scenario, so they are well-positioned to assume your risk without risking financial ruin.  On the other hand, when you assume the risk yourself you leave yourself vulnerable to significant financial loss.

For example, if you decide not to carry automobile insurance and assume all the risk yourself.  If you have an accident you have to pay everything out of your own pocket. You have retained the risk of the possibility of an accident happening. You may even have to carry the cost of any lawsuits that are initiated from the accident. If, however, you had taken out liability insurance, the insurance company would be taking on your accident risk. 

Transferring the risk to an insurance company comes at a cost.  You have to pay a premium each month in exchange for them assuming your risk.  

This concept not only applies to car accidents, it also applies to your house burning down or losing your income due to an injury. 

Your insurance coverage needs to be part of your comprehensive financial plan.  You financial advisor in Boca Raton has a better idea of what your financial circumstances are. We can help you determine what kind of insurance coverage you need for your unique situation.


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