Complete Sheet 46 in your Personal Financial Planner workbook. This exercise will help you to confirm your current coverage and assess your insurance needs. As you fill out this Sheet, consider the following. After you complete the worksheet, write no more than one page that addresses the following questions. Answer Key Exercises 1.
Insurance provides protection against possible financial loss.
An insurance company is a risk-sharing organization that agrees to assume financial responsibility for losses that may result from an insured risk. The most common risks are classified as personal risk, property risk, and liability risks. Risk management is an organized strategy for protecting and conserving assets and people. Four methods of managing risks are risk avoidance, risk reduction, risk assumption, and risk shifting. Each method has merits, but the most common and most effective method of dealing with risk is to shift, or transfer, it to an insurance company.