5 Ways to Manage Risk: STARR

5 ways to manage risk. Just remember STAR with an extra R. Share, Transfer, Avoidance, Reduction, and Retention.

Let’s say you need $3 million of life insurance coverage because your family counts on you for financial support. Using that situation, with STARR, the first letter is S for:

Share - share the risk with an insurance company. If you need $3 million, you can shift $2 million to the insurance company by buying a life insurance policy for $2 million and self-insure for $1 million.

T for Transfer - transfer all the risk to the insurance company. Buy a $3 million life insurance policy.

Avoidance - avoid the risk. For example, you can avoid extreme sports. If you don’t want to die from skydiving, don’t skydive.

R for Reduction - reduce the risk through loss prevention methods and safety. One example is going to the doctor for an annual check-up, eating healthy, and exercising daily.

Retention - accept the risk and hope the risk doesn’t occur.

Thanks for watching. This is Tan, you trusted advisor.

This material is for educational use only and does not constitute tax, legal, or investment advice. Information may be changed or updated without notice. Consult with a licensed professional regarding your personal circumstances.

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