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yet another post about insurance

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So I was talking to my fellow m-network members about insurance and I explained my foolproof method for determining whether you need a certain type of insurance. The key thing is not just how likely the bad thing is to happen, but the impact that it will have.

Its not the risk of dying that’s the variable as to whether you should have life insurance, its the risk x outcome that you need to consider.

e.g. the risk of me dying is negligible, the (financial) effects of me dying are negligible
negligible x negligible = low so don’t bother with life insurance plonkee


the risk of me become disabled is low, the (financial) effects of me becoming disables are catastrophic
low x catastrophic = high so get disability insurance plonkee

So there you have it. The perfect way to decide whether you need insurance.

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6 comments for “yet another post about insurance”

  1. As I said in the M-Network forums, great way to look at and a great tool for helping people make decisions.

    Thanks for sharing…and see I didn’t steal it;-)

    Posted by glblguy | August 23, 2007, 7:51 pm
  2. excellent post - very informative, post more articles related to m-network please - thanks

    Posted by Travel Insurance Quotes | December 10, 2007, 12:23 pm
  3. I like this tool, but I have to say that there are so many other factors that go into determining risk.

    One benefit of life insurance for example is that if you become terminally ill, you can cash in your policy early for a % of the death benefit.

    I dont know about you, but if I knew i was going to die, I would love to have the cash to enjoy my last year or so.


    Posted by Frank Kerry | July 6, 2009, 7:18 pm
  4. It is a good foundation to work on, there is also the cost of buying the insurance and whether the individual feels the cost of the monthly premiums is worth the protection the insurance provides. Individuals often have to make that decision when buying their home in mortgage payment protection insurance.

    Posted by Mortgage Protection Insurance | January 27, 2010, 6:30 pm

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