International Baccalaureate (IB) Practice Exam 2026 – Complete Study Resource

A person becomes self-insured when they reach a financial position where their assets and savings can cover their own risks, thus eliminating the need for traditional insurance. This situation usually occurs when individuals have sufficient resources to manage potential losses without relying on insurance.

When someone's children are grown, they typically no longer have the financial obligation of supporting dependents. Coupled with having no debt, this individual can shift their focus to maintaining their own financial health without the liabilities that often necessitate insurance. Additionally, having a fully funded retirement indicates that they possess sufficient savings and investments that would provide for their needs, ensuring they can sustain themselves in the event of unforeseen circumstances.

Thus, this combination of factors represents a scenario in which the individual is financially stable enough to self-insure, as they have positioned themselves to absorb risks independently. This understanding of financial independence is essential in determining whether an individual can forego traditional insurance policies.