Insurance & Risk Management
Insurance & Risk Management is the process of protecting your income, assets,
health, business, and family against unexpected financial losses.
1. Major Types of Insurance:
Health Insurance: Covers hospitalization and medical expenses
Term Life Insurance: Protects dependents if the insured dies
Personal Accident Insurance: Covers accidental death/disability
Motor Insurance Protects vehicles against accidents, theft, and third-party liability.
Home Insurance: Protects property and household contents
Travel Insurance: Covers travel-related medical and financial risks
Business Insurance: Protects businesses against operational losses
Professional Indemnity: Protects professionals against claims arising from their services
Property Insurance: Protects buildings, machinery, inventory, etc.
Cyber Insurance: Helps manage financial losses from cyber incidents
2. Core Risk-Management Strategy
A simple framework is: Identify → Assess → Prevent → Transfer → Monitor
Identify risks – What could cause a major financial loss?
Assess risks – Estimate probability and potential damage.
Prevent/reduce – Take precautions to lower the risk.
Transfer – Use insurance when the potential loss is too large to bear yourself.
Monitor – Review your coverage as your income, assets, family, and liabilities change.
3. Insurance Priorities
For personal financial planning, a sensible priority is usually:
Emergency fund → Health insurance → Term life insurance (if dependents) →
Personal accident/disability protection → Motor/property insurance → Specialized coverage.
4. Avoid Common Mistakes:
Buying insurance primarily as an investment.
Choosing a policy only because the premium is cheap.
Having insufficient health coverage.
Buying inadequate life cover relative to family obligations.
Ignoring exclusions, waiting periods, deductibles, and claim conditions.
Failing to update nominees and beneficiaries.
Allowing important policies to lapse.
Over-insuring small risks while leaving catastrophic risks inadequately covered.
