In the investing realm, we focus on speculative risks—those risks we take on voluntarily, with the expectation of receiving some financial reward. Insurance deals with pure risks—where we involuntarily face risks without any promised rewards. That is, with pure risk the only upside is that a “bad” outcome doesn’t happen. Since there’s nothing to be gained from exposure to pure risks, it’s logical to try to eliminate or reduce them using a variety of insurance tools.
The insurable risks we cover in this Module primarily focus on: death, disability, property damage, and personal liability.
A complicating element in our pursuit of proper insurance is the lingering suspicion that insurance agents may not have our best interests at heart. This may lead to procrastination, which is less than ideal because it’s often inadvisable to delay coverage.
It's crucial to ensure you're properly covered at all times.