What is financial risk management?
Every financial decision — whether by an individual, organization, or business — involves risks. Financial risk management is the process of identifying, analyzing, and taking precautionary steps to reduce or avoid those risks as they relate to your family and your financial goals.
Why is risk management important in finance?
Usually, the term “financial risk management” is associated with big corporations. But risk management is equally vital in personal finances and is a key component for ensuring that individual investor goals are achieved.
What is disability insurance, and how does it work?
Disability insurance replaces a portion of an employee’s income when they can’t work because of an illness, injury, or disability. On average, disability insurance covers up to 60% of an employee’s earnings.
What is long-term care insurance, and who needs it?
This type of policy covers basic, long-term services, and support for daily needs due to a chronic illness, disability, or condition such as Alzheimer’s disease. While health care insurance or Medicare helps pay for immediate medical expenses, long-term care insurance helps to pay for personal or custodial care for necessities such as bathing, dressing, or eating.
What is life insurance, and what types are there?
Life insurance protects loved ones or dependents you leave behind upon your death. There are two basic types of life insurance to consider. Term insurance is similar to “renting.” You have the life insurance for a certain period, and then it expires. Term insurance provides for a short-term, temporary, or specific need. Permanent insurance is like “owning,” as the life insurance builds up cash value that may allow you to retain the policy for the long term even after you stop paying premiums into it.
Why do I need life insurance?
Whether you are single, married, have children, or own a business, life insurance supports your family or those who depend on you if an unforeseen circumstance should arise. Some of the benefits of life insurance include: a means to pay for funeral costs, pay off debt, estate taxes, or any final expenses; income replacement; a legacy to leave for your family or charity. As a part of a financial plan, your financial advisor can help you determine your life insurance needs, the type of insurance that is best for your situation, and related costs.
How much life insurance do I need?
There are many factors to consider when determining the amount of insurance coverage you will need, such as your life stage, circumstances, and the standard of living your family will want after you are gone. You will also need to determine your family’s income needs and whether other resources are available (such as social security benefits) to fund those needs. A financial advisor can conduct a thorough analysis of your situation and assess how much insurance you will need as part of your risk management plan.