What do individuals primarily use to transfer their risk of loss?

Individuals primarily use insurance to transfer their risk of loss because it provides a systematic way to manage potential financial setbacks. Insurance acts as a protective financial mechanism that allows individuals to minimize their exposure to significant losses, such as those caused by accidents, illness, property damage, or death. By paying a premium to an insurance company, individuals enter into a contract that promises financial compensation in the event of a covered loss. This allows them to safeguard their assets and ensure financial stability despite the uncertainties of life.

The other options, while related to financial management, do not serve the specific purpose of risk transfer in the same manner. Investments can grow wealth over time but do not directly address loss risk. Bond trading is a method of participating in the debt market and carries its own risks, but it is not a tool designed for loss transfer. Retirement funds are focused on saving and preparing for retirement rather than transferring risk associated with unexpected events. Therefore, insurance is the most effective tool for transferring risk among the options provided.