This lesson will teach you about the concepts of personal risk and insurance. Insurance provides protection against possible financial loss. The financial consequences of failing to obtain the right amount and type of insurance can be disastrous. In all these cases, you should consider the cost of the appropriate insurance protection, and then consider the potential costs to you or your family if no insurance is carried. When you purchase an insurance policy , the insurance company agrees to assume the financial hardships that result from your risk.
Insurance companies do so in exchange for a payment, called a premium .
This lesson will help you learn how to analyze which insurance is most important to protect your assets and how much is adequate to cover your potential liability. Finally, the lesson will show you the steps you need to take in planning an insurance purchase . The needs of a single person differ from those of a family, a single parent, or a couple. All of these people face similar risks, but their financial responsibility to others differs greatly. In the three previous units of this course, you have been learning about formulating and implementing your financial plan.