StellarWhat Is Personal Risk?
Life is full of uncertainty. No one can predict when a car accident might happen, when a storm might damage a home, or when someone might get sick and need expensive medical care. These situations are examples of personal risk. Because risk can create financial hardship, people need strategies to protect themselves from unexpected losses.
Some risks are insurable. For example, the possibility of a car accident is an insurable risk, while something like losing a sports game is not. Insurance works by pooling money from many people through premiums so that when one person faces a covered loss, the insurer can pay for the damages.