Risk Management
You Can't Eliminate Risk, But You Can Prepare For It
Effective risk management is the foundation of financial planning. Without it, your family's entire financial future could be jeopardized by simple adverse events.
Risk avoidance is the best risk management program, but when external risks are inescapable, transference of risk to an insurance carrier is the best way to safeguard your wealth and protect your financial future. Remember, insurance is not about you; it’s about protecting others.
The risk management spectrum starts with health insurance. There’s a maxim that your first wealth is your health. Modern health insurance is both a major household expense, and the individual health insurance market is a hot mess. Achieving an early retirement goal can hinge solely on finding affordable pre-Medicare individual health insurance.
Next is long-term disability, namely the risk to your biggest asset – earned income. Insufficient income protection is a key reason why many families encounter severe financial hardship when a breadwinner is permanently injured or sick and unable to work.
Disability risk transforms into elder custodial care risk in your retirement years. For a married couple 65 years of age, there’s a 50% chance one spouse will live to age 90. The cost of professional morbidity and memory care in these later years is staggering and can devastate retirement and inheritance plans alike.
The death of a breadwinner presents its own set of risks and financial challenges so life insurance protection is essential. Life insurance take many shapes and forms and there is no universal approach to hedging early death risk; it’s a deeply personal financial planning exercise.
Lastly, personal liability is an underappreciated financial risk. With the right guidance, it’s not hard or expensive to create effective asset protection, but it’s easy to botch through under-insurance and /or asset-titling mistakes.