In law and economics insurance is a form of risk management primarily used to hedge against the risk of a contingent loss. It is the equitable transfer of the risk of loss from one entity to another in exchange for a premium – a fixed cost incurred to minimize the effect of uncertainty and mitigate the impact of unfortunate events.

The misperception that this subtle yet fundamental component of investment strategy is a simple household commodity can create costly overlaps and devastating gaps for the inattentive. We recommend that everyone rethink their insurance strategy relative to their investment strategy and consider a thorough review by a high level practitioner.