Managing risks is an important part of being successful. Challenges may arise in every aspect of your life, including your health. During these times, it’s important to have a strategy in place.
Here is a look at 5 risk management techniques that can help stabilize your insurance coverage.
1. Avoid Activities with Inherent Risks
You can avoid risks by choosing not to participate in activities where there is a high likelihood that you may get injured or sick. Any activities that could lead to your death should also be restricted. One common example is smoking cigarettes. Smoking carries significant health and financial risks. According to research, smoking is one of the leading causes of preventable death in the U.S. Thousands of people file smoking-related claims every year. Studies also show that smoking regularly increases your chances of being diagnosed with lung cancer. Many life insurance companies take action by raising the premiums of people who smoke regularly. In most cases, health insurers can change your premium based on your age, family size, geography, and smoking status.
2. Practice Risk Retention
Risk-retention is acknowledging and accepting that the current situation involves risk. Normally, acknowledging the risk will help offset higher costs in the future, such as a health insurance policy with a high deductible. One of the primary risks you might face is having to pay more money out of pocket if you develop serious health issues in the future. If the issue is life-threatening, the health insurance benefits should cover everything once you have paid the deductible. If you don’t have any serious health issues, then you don’t have to worry about covering any out-of-pocket expenses.
3. Use Preventive Methods
You can use preventative methods to minimize your potential losses instead of eliminating them. This strategy attempts to prevent your minor losses from turning into bigger problems. For instance, by getting annual medical checkups and physical exams, you can take care of any health issues early on, thus avoiding higher medical costs later.
4. Transfer Risk to Your Insurer
This can be done by entering into a legally binding contract with your insurance company who will assume your risks in exchange for your premiums. The contract will outline every aspect of your policy, including the conditions that should be met for your insurer to continue covering you. Once you agree to the terms and start paying your premiums, you have officially transferred your risk to the insurer. While finalizing your policy, the insurer will analyze different stats to determine the appropriate payments that coincide with the coverage that you are looking for. Whenever you file a claim, your insurer will check to ensure that you meet the required conditions for a contractual payout.
5. Opt for Group Policies
One way that businesses share risk is through implementing employer-based benefits. This allows insurance companies to pay a fraction of premiums along with the employees. These group policies allow employees to share risks with their employers while also allowing companies to improve their reputation because every employee has insurance. The benefit of such risk-sharing policies is that the cost of premiums declines significantly due to more people sharing the risks. In some cases, you may find the most efficient thing to do is choose a life insurance and health care policy that is covered by your employer. These policies are often cheaper than pursuing your own individual policy.
These are a few ways in which you can manage insurance risks effectively. If you have questions about your personal and commercial insurance needs, our experts at Knight Insurance Services are here to assist you. Contact us today!