University of Illinois Extension

Step 1: What's My Risk?

For each event listed below, rate the potential financial severity and the probability or frequency of the event at this time in your life. For our purposes, we are concerned only with negative financial impacts. If you do not rate an event for both financial severity and probability, that event will not appear in later sections of this activity. If an event is not applicable to you (e.g., "job loss" if you are already retired), leave it blank.

Rate the financial severity of an event as if you have no insurance. For example, rate "disability" as financially devastating, even if you have an excellent disability insurance policy.

Use these definitions to help you rate the severity of an event. Remember, rate it as if you had no insurance:

1 Financially devastating, possibly resulting in bankruptcy
2 A huge financial impact that would radically change your lifestyle
3 An uncomfortable but manageable financial impact
4 Very little financial impact; you could cover it with an emergency fund

Use these guidelines to categorize the probability of an event at this time in your life:

1 Almost certain to happen
2 Probably will happen
3 Probably will not happen
4 Almost certain not to happen

Let's look at one event as an example. If you are a young parent with pre-school children, you are the major breadwinner in your family, and you have no life-threatening health problems, then you will probably rate the financial impact of your death as a 1 or 2 (ignoring for the moment any life insurance you have) and the probability a 3 or 4. However, if you are 90, in poor health, and have no financial dependents, you will likely consider the financial severity of your death either a 3 or 4 and the probability a 1 or 2.

Not all risks are listed, and you may have risks that are unique to your situation. Please type additional risks you wish to consider in the spaces marked "Other." For example, you may have risks stemming from business activities or hobbies.

Now, rate the financial severity and probability of the following events. Remember, you can always return to a step after you've completed it by clicking on the buttons at the bottom of the page.

 

Rate the financial severity and probability of the following events.

Event Financial Severity
Most (1) <--> Least (4)
Probability
Most (1) <--> Least (4)

Doctor's office visit

1 2 3 4

1 2 3 4

Major surgery or hospitalization

1 2 3 4

1 2 3 4

Disability

1 2 3 4

1 2 3 4

Long term care

1 2 3 4

1 2 3 4

Death

1 2 3 4

1 2 3 4

Other

1 2 3 4

1 2 3 4

Event Financial Severity
Most (1) <--> Least (4)
Probability
Most (1) <--> Least (4)

Minor fender-bender

1 2 3 4

1 2 3 4

Burglary of home

1 2 3 4

1 2 3 4

Car totaled in accident

1 2 3 4

1 2 3 4

Destruction of house and contents

1 2 3 4

1 2 3 4

Other

1 2 3 4

1 2 3 4

Event Financial Severity
Most (1) <--> Least (4)
Probability
Most (1) <--> Least (4)

Divorce

1 2 3 4

1 2 3 4

Marriage

1 2 3 4

1 2 3 4

Child going to college

1 2 3 4

1 2 3 4

Other

1 2 3 4

1 2 3 4

Event Financial Severity
Most (1) <--> Least (4)
Probability
Most (1) <--> Least (4)

Liability for injuries to others

1 2 3 4

1 2 3 4

Job loss

1 2 3 4

1 2 3 4

Professional liability

1 2 3 4

1 2 3 4

Victimized by investment fraud

1 2 3 4

1 2 3 4

Other

1 2 3 4

1 2 3 4

Other

1 2 3 4

1 2 3 4