Naw, I Don’t Want No Insurance

By Eric Grant CNW Columnist

Insurance agents hear this all the time, and they may have heard it from you at some point. Insurance agents also hear prospects say “they’ll just work it out.” The reality is, this sentiment may be correct. Insurance is a financial tool used in the process of managing risk. In evaluating your risks, the first question that you should ask is, what are the risks that can prevent me from building and keeping my wealth. For instance, if your vehicle is essential to you generating income to save and build wealth, you make provisions to be certain that you can continue to use that car to generate income and build wealth. Of course, the state mandates insurance for this risk, but there are other ways to manage risk.

There are generally 2 ways to manage risks. You can assume the risk or transfer it. That is to say, you can cre- ate enough savings to cover any risk or you can transfer it with tools like insurance where the risk is transferred to an insurance company for a cost. If you don’t make provisions for these risks, you will be forced to use your wealth to address the risk. In the example above, if your car is without insurance, and you absolutely need that car to generate income, you are forced to use whatever savings you have (or borrow) to repair the car and continue generating income.

So, you may be asking, what are these risks? Honestly only you know the extent of your risks. However, there are some standard risks that most people face. For most, our home (rental or otherwise) is our principal source of wealth. Ask yourself, what would you do if your home was unavailable to you temporarily or permanently. While you’re at it, what would life look like if you were unable to work for whatever reason, and what