TRANSFERRING YOUR RISK Most people want the confidence and peace of mind that comes from having more certainty in their life (and their pursuits) – particularly around the areas of:  Providing for their family financially;  Protecting their families health and well being;  Setting themselves up for the future;  Achievement of lifelong passions and dreams (be it financial, business related or personal endeavors). All of these meaningful outcomes & objectives require a strategy or a plan of action that ideally give you the highest probability of achievement (or greatest level of certainty). This is where personal Insurance solutions can play a vital role. Depending on your background and exposure/experience you may have a positive or negative image when you hear or read about personal insurance. Lets be clear, insurance is merely the strategy of transferring risk of a particular event from one person or party to another. The person/party accepting the transferred risk is willing to take it as they feel they can manage it in a unique and better way than the other person and are prepared to do it for a certain price (ie insurance premium). The person transferring the risk is usually willing to pay the price (insurance premium) as they realise they could not fund the ultimate cost it would have on them financially, emotionally and physically if the event they are concerned about (risk), came to fruition (compared to paying an annual insurance premium). For example A person or family has a goal of being debt free, because their ultimate outcome is to have financial security. A strategy to provide greater certainty of this being achieved is to obtain life insurance. Lets say this person/family has a loan of $500,000. Life insurance for $500,000 as a solution, provides a strategy for transferring or eliminating the risk of the key income earner passing away before the $500,000 loan is paid off. Should this event (risk) happen, the families future may become uncertain, creating insecurity (compounded by the heartache and grief of the families loss). In this instance, for say $50 a month or $600pa, the family/individual is paying the insurance company to takeover the risk of their key income earner dying before the loan is repaid. A typical mortgage term of say 25 years usually means the $500,000 does not start to be paid down until the last 10 years of the 25 year term (due to the interest repayments). What if you instead planned to save $600pa in say a term deposit every year at an average interest rate of say 5%pa; instead of paying the insurance premium? At the 15th year for example of the 25 year mortgage, the amount saved (assuming no tax on earnings), would be approximately $12,947. This is well short of the funds needed to pay off the remaining loan. Having the Insurance Company take the risk of a family member passing away before the loan is repaid for $600 a year looks a pretty smart investment! The insurance company is happy to take the risk off you as they are backing themselves to get enough other people doing the same thing (hence receiving lots of $600pa premiums to sufficiently cover the life insurance pay out of $500,000 when required). The same principle applies to Income Protection, Total & Permanent Disability and Critical Illness Insurance solutions. These are all merely solutions/strategies to achieve greater certainty of an individual’s or families meaningful outcomes/objectives being achieved – should they value having certain risks removed (transferred).