Managing Risk

In the winter of 2009, two blizzards came to Southern Pennsylvania within 48 hours. Each storm brought over 3′ of snow. It was so much snow that we feared the roof on our home would collapse.

So to prevent this we climbed ladders onto the roof with snow rakes to push the snow off of the roof of our home. Bundled up in heavy clothing made it hard to move. But we had to jump onto the roof from the ladder onto the 6′ of snow and ice. It was pretty scary. This chore came at great risk to ourselves, but the fear of having to pay for damage to our home seemed worth the danger of falling 25′ onto the ground.

The foundation of financial planning is covering risk or insurance planning. With risk comes the chance that we could potentially lose our ability to keep wealth or see our ability to grow wealth prematurely suspended. To best cover risk, however, we need to know our risks and how likely a loss is to occur. We must also know how much we could potentially lose in the event of a traumatic loss such as a car accident, damage to our home or death.

Why Insurance Planning?

Insurance planning may not be the most exciting part of a financial plan, but it is the most important. Without proper risk planning any potential growth in wealth could be in a moments notice suddenly lost.

There are many risks to our path to financial success. Are you covered?

Risks to Growing Your Wealth

Knowing your risks and the best ways to circumvent the possibility of a loss is the key to good insurance planning. Below are some major potential losses you need to cover to prevent devastating loss.

  • Property and Casaulty (P&C)–Also known as Home and Auto Insurance, P&C insurance is necessary for both home owners and renters. Speaking with an independent P&C agent is a good idea so that they can explain your coverage and can advise you on your coverage needs. You should also discuss an umbrella policy.
  • Health Insurance. Many Americans have health insurance through their employers. Those uninsured who face loss due to poor health are a leading cause of bankruptcy.
  • Disability Insurance- A regular income is foundational to building wealth. Many employers do provide a short and long term disability policy to their employees. Employees are shocked to learn that any benefit that they would receive could be taxable and cover only a small part of the workers income. Typically employer provided disability insurance do not cover bonuses, overtime hours and could only replace as little as 60% of gross salary.
  • Life Insurance Working with a seasoned advisor a client will answer questions about the amount of life insurance needed as well as the length of time the policy will need to cover the insureds life. Not all policies are equal and a good advisor will be able to educate the insured as the variety of features including accessible and tax free benefits the insured can enjoy during life.

Have you had a professional review your insurance coverage? Please call me for a free analysis or a referral to an insurance professional.