“Sheesh” this stuff is expensive, are there any other alternatives to insurance…?
C = the “c” stands for control. Some risks can be controlled so that the impact is limited. Then, the need to insure them reduces. You could consider this for things like property. If you’re able to control the environment they’re in, then you may be able to limit any risk. We do this with Health and Safety in the workplace.
R = Retain or accept the risk.
This is where someone may decide, “Well, I’ll take that risk.” In the minds of such individuals, the odds of a particular event is low or unlikely, so they just accept that risk.
A = Avoid.
This is probably quite obvious. I guess, if I had a car that I was never going to drive (to avoid the risk) then perhaps it would make sense to leave it uninsured.
F = Finance the risk. Now, this is a situation where you’re happy taking some of the risk, such as with an ‘excess’ in your insurance plan. An excess lets you pay for some of the risk while also passing on the main risk to an insurer. This approach can often allow you to lower your premium costs to fit a tight budget. You’ll need to set aside some funds in case there is an event, but you’ll also have the support of an insurer for the main amount.
T = Transfer. This is perhaps the most affordable way to manage risk. You transfer your risk to an insurer and pay them a premium to carry it for you.
So, there are other alternatives to fully insuring yourself or your property against risk. The one that best suits you will depend on how much risk you’re happy to bear and how much you want to transfer. Every situation is unique. In fact, even major insurance companies find a balance by sharing some of their own risk with reinsurers.
If you would like a hand determining whether how you can ‘CRAFT’ some of the risks you may face during your life, then please talk to one of our financial advisers. They have been trained to run through these options to find the best solution for each person.
Give or one of the team a call: Darryl at Imak Advice, 09 307 9300.