What is insurance?

For some of you, you have a great responsibility in taking care of your family. Your dependents rely on you to provide for them. You are worried about the financial implications to your family if anything happens to you. The good news is that most of such financial risks can be mitigated. Risks can be mitigated through:

1. Risk avoidance (if the sky is dark and might rain, eating indoor eliminates the risk of getting wet)
2. Risk reduction (if the sky is dark and might rain, carrying an umbrella helps to reduce the chances of getting wet but eliminating that risk of getting wet is not possible)
3. Risk transfer to a 3rd party (if the sky is dark and might rain, asking your colleague buy lunch outside the building transfers the risk of being wet to him)

Insurance is the third form - the transfer of financial risk to the insurance company through an insurance contract. The following are the common insurance for individuals:

1. Life insurance covering death
2. Life insurance covering total and permanent disability
3. Life insurance covering critical illnesses
4. Insurance covering occupation disability
5. Health insurance covering hospital and surgical insurance

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