Personal risks can be classified in six categories:
a) Earnings risk - unexpected decline in income due to death, sickness or unemployment
b) Medical expense risk - to recover from sickness
c) Liability risk - due to negligence, e.g. use of motor vehicle
d) Physical asset risk - loss of home, car or other property
e) Financial asset risk - decline in value of financial assets
f) Longevity risk - living too long and running out of savings
The first four types of risk can be insured. You should look for low cost insurance. This allows the remaining savings to be invested to provide for your retirement and other financial needs. You can buy life annuity to cover the risk of living too long.
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