Insure large risks with low probability

Buy insurance only for large losses with low probability of occurrence, such as death or disability by accidents, or total loss of a house by fire or a major traffic accident. Do not insure for small losses that occur quite frequently, such as short term sickness.

The best way to provide for loss of income and medical expenses due to short term sickness is through your personal savings. If you have adequate savings, you can use them for emergency.

As a rule of thumb, you should insure for an event that may occur only once in 5 years or longer. If it occurs more frequently than five years, you can fund it through your savings.