The goal of risk management is to identify potential risks to your financial well-being, and then find ways to mitigate those risks.
We are all exposed daily to various financial risks. Some risks would have only a minor impact on your financial life, while others might have a major impact. An example of a relatively minor risk might be the possibility of a rock flying up and cracking your windshield while you’re driving. While this would be unfortunate, it would probably not seriously affect your overall financial condition. But if you were in a major traffic accident, with injuries to you and others, this could potentially wipe out most or all of your assets.
We evaluate all of the major financial risks you may face, and make recommendations as to how to mitigate these risks. Some of the most common are:
- Death of a family member – This can have a substantial impact, particularly on families with children. Life insurance is the method used to mitigate this risk. We perform a very thorough “life insurance needs analysis” to determine the amount of insurance needed to provide for the needs of your family.
- Disability of a family member – This is the risk that an income-earning member of the family becomes unable to work because of injury or illness. This can significantly affect the family’s financial health, particularly if the disability is long term. We help determine the policy amount and characteristics of the disability insurance that would cover this risk.
- Illness or injury to a family member – Health care can be very expensive, and may deplete a family’s accumulated savings, leaving the family financially unsound. In addition, without the proper insurance, life-saving treatments may not be available due to the excessive cost. We analyze the various health insurance options available in order to mitigate this risk. We also look at the possible benefits of setting up a Health Savings Account.
- Nursing home care – As medical advances continue to increase life expectancy, advanced age presents an additional medical cost for families. And the cost of nursing home care is becoming more and more expensive. We evaluate options such as long-term care insurance, and also various strategies utilizing Medicaid that allow the family’s assets to be protected.
- Losses to property – This includes losses to property you own, like your home, car, boat, personal belongings, etc. Severe damage or a total loss of any of these assets can have a considerable impact, especially your home since it is the largest single purchase most individuals make in their lifetime. We help you look at various insurance amounts, deductibles and premiums to come up with the most suitable insurance to cover this risk.
- Liability – This is the risk that a family member is determined to be financially responsible for bodily injuries and/or property damage sustained by others. This risk exposes your assets to claims or lawsuits, which have the potential to have a severe impact on your savings and other assets. Liability risk is mitigated by auto, homeowners and umbrella insurance. We help you evaluate and compare the various coverage amounts to be sure that your assets are protected.
The need for various types of risk mitigation and insurance changes over time. As your financial advisor, we recommend a review of your insurance needs at least annually, so that we can be certain your policy amounts and coverages are appropriate. And because we’re a fee-only financial advisor that earns no commissions, there is no incentive for us to recommend insurance that you don’t need. And since there is no commission owed to an insurance salesman, we’re able to help you find the lowest-cost policies on the market.