The Five Methods for Handling Risk

Risk.
Quite simply, risk is just another element involved in life. We make what we think to be rational decisions everyday. Those decisions are dependent on the amount of risk we are comfortable taking.

You weigh the odds, weigh the facts, weigh the setting-- which are all being factored in to your decision making brain to decide what to do about a problem. The basic solutions to taking care of a risk are to either (1) to totally avoid the risk or (2) to accept the risk.

By avoiding a risk, you avoid the consequences of the risk. You do not drink alcohol therefore you never have to worry about getting a DUI. You do not gamble therefore you never have to worry about losing your money to betting. However, you also never get your chance at millions ("Imagine what a buck can do" is the ongoing CA lottery marketing phrase). Where others may see huge loss, others may see huge gain. Marketers have the job of getting you to see the bright opportunities to certain risks, while advocates try expose the potential dangers of risk that may be a threat. There is just an ongoing tug-a-war between the two sides.

Accepting risk does not mean you have to accept the risk blindly. Managing risk is key to being able to get the most out of the accepted risk. The main example for this option is debt. We accept the risk of debt for the gain we get. We may be low on cash in our bank accounts and agree to take on the debt with the intention of paying the balance down over time. People do this all the time with cars, homes, and college tuition.

We all know what happens though when this risk is not managed actively. Relationships are destroyed, emotional stress occurs, and depression can be a result of debt problems. This is why people should be educated about debt and understand the consequences of having debt.

Wow I already typed so much. Aw man. I did not even get to dig in to the insurance point yet. I'll get to the next point next time. Until next time! Be rational and know all the facts behind the risk!

Insuring my Insurance Skills

Financial Donuts is going to get dunked with an insurance topping this month as I need to review the topic as much as I can. I will start selling Blue Shield, Anthem Blue Cross Health Insurance, and possibly Life Insurance products through a broker soon. So I will definitely need to know my products well.

A brief recap about me this past year, I got licensed in Life & Health Insurance beginning this year. I was working at an insurance company that limited me to sell only their products (which I really disliked). So I left that company to focus more on studying financial planning. Coincidentally, once of the classes of the Financial Planning program was Insurance. I took it this summer, and learned a more client-side approach to providing life and health insurance rather than trying to "force" life insurance down people's throats. We tackled many life issues that people go through, and discussed ways of solving those problems with insurance. I got an "A" in the class and now feel very confident in providing sound advice for people concerning insurance.

Just recently I was given the opportunity to sell once again, but this time with more options for my clients. I sincerely believe in finding the best deal for my client rather than finding the most appropriate deal in the interests of my company. People over profits is my altruistic belief!

So I took this opportunity once I was given it, but now I have to review the information I learned earlier this year and this past summer to be the knowledgeable insurance consultant for people.

Hopefully you might learn a thing or two about insurance for your own knowledge. I'll lead in to the topic with our first assignment in the class which was called, "Insurance is a SCAM!" Its a common connotation people have of insurance, but really insurance has helped so many people prevent major financial catastrophe.

I'll get in to it more with my next post. Stay tuned!