On a financial level, the greatest risk we are exposed to is a temporary reduction in our income or an unexpected increase in expenses.
There are two ways to manage the risk of uncertainty in our income and expenses: through a reserve fund and through insurance policies.
The reserve fund can be composed of cash savings and available credit limits. Experts generally recommend that your reserve fund should help you maintain your standard of living for six months. Six months isn't a number pulled from a magician's hat. The insurance industry has shown that more than 90% of financial problems are temporary and can be resolved in less than six months.
If financial problems last more than six months, they are most likely not temporary but permanent. Managing permanent risks requires the use of insurance policies to transfer the risk to insurance companies.
You should review all your insurance policies periodically. For example, your life insurance policy should be reviewed every time there is a major change in your life, such as the birth of a child, marriage or divorce, a promotion at work, the purchase of a home, etc.
Another type of policy that should be reviewed periodically is disability insurance. Many people rely solely on Social Security disability insurance. However, the reality is that Social Security denies two out of every three applications it receives. Social Security disability insurance is only granted to those whose health is so severely affected that they are unable to perform any type of work.
For this reason, it is necessary for individuals to have a separate disability insurance policy that complements Social Security.
Another policy you should review periodically is your homeowners insurance. Many people simply purchase the coverage required by the bank to grant them a mortgage. However, the coverage required by the bank may not be the same coverage you need. For example, if your mortgage is for $200,000 and your house is worth $400,000, you need a policy that covers the value of your house, although the bank will only require you to have one for $200,000.
You'd do anything to protect your family, but do you have life insurance? If you die, how will they pay your debts? There are different types of life insurance; some are term and very affordable, and others help you save for your future. Call, and we'll give you some illustrations to see which insurance is right for you.
If you have a small amount of insurance and no health insurance, you could risk all your assets if you end up sick and uninsured. This is also a good incentive for your employees. Call for a quote.
If you become disabled due to illness or an accident, how would you pay your debts? This insurance protects you while you're unable to work, paying you weekly.
To own a business, you need general liability and workers' compensation insurance. Without these policies, you could face hefty fines and even have to close your business. Don't take this risk; call and we'll get a quote.
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