Advisors will often say their clients are “self-insured.” But because insurance is, by definition, the pooling of risk, no one can actually self-insure. Having insurance means not having to shoulder the burden alone if things go south. It’s hedging your bet so that, if the wheels fall off, someone else is there to help put it back together. So, when a client “self-insures,” they are taking 100% of a given risk, and have enough money to absorb a potentially very significant loss.

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