Personal Risk Management (PRM) — the process of applying risk management principles to the needs of individual consumers. It is the process of identifying, measuring, and treating personal risk (including, but not limited, to insurance), followed by implementing the treatment plan and monitoring changes over time.
A fundamental principle of effective risk management is not to accept large, financially devastating risks. On the opposite end of the risk management spectrum, risks you can realistically afford (if they occur) should be accepted. Risks you can neither afford nor transfer to an insurance company should be mitigated or eliminated.
Reviewing insurance policies as you begin to head toward your retirement can reveal opportunities to reduce expenses and ensure you have adequate insurance coverage.
Conducting an insurance review involves gathering your insurance policies and organizing them to methodically review what risks they cover and don’t cover, as well as your financial obligations in terms of premiums and out-of-pocket cost in the event of a claim. To be comprehensive, this insurance review should include a review of all forms of insurance: property and casualty, liability, health, life, and long-term care. You may also have special lines of insurance for recreational vehicles or other activities.
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