Managing risk in your life means identifying risks against your health, family, and home, and then developing a plan to address those risks. Getting insurance is probably the most well-known way to protect you against risk, whether it be life, health, home, or car insurance. No one likes paying insurance premiums, the receiving insurance benefits if something goes wrong helps any situation.
The Key Takeaways
- Not doing a good job of identifying and managing risk jeopardizes yourself and your family.
- If you identify and manage risk well, you are giving yourself and your family freedom in life and from worrying about a major loss.
What kinds of risks should you be aware of?
Think of something bad that can happen, and that is a risk. Property and casualty insurance protects your belongings, health insurance helps pay for medical bills, long-term care provides for long-term medical needs, and disability and life insurance provide funds if you become disabled or after you pass. You may also want to think about an umbrella policy to further help cover any needs. If you own a business, you may want to think about a buy-sell agreement with disability provisions. If you work in a profession that is often sued, you may require some additional insurance and planning to protect your assets.
How much insurance do I need?
It is probably wisest to always plan for the worst-case scenario. Getting insurance for the legal minimum may leave you unprotected in something bad happens. You need to also balance out that protection with finding coverage that you can afford. It is a balancing act to decide what kind of insurance, how much insurance, and the monthly cost of premiums.
What You Need to Know
Children get older, you get closer to retirement, your family expands; you should not forget that your insurance needs change over time. You should regularly review your policies to make sure that you have adequate insurance coverage based on your priorities and life situation, whatever it may be.
Actions to Consider
- Always look for ways to reduce your monthly payments. Are you will to have a higher deductible? Do you want to install a home security system? Should you buy a new car? Talk with your insurance agent to discuss how a decision you are thinking about making might affect your premiums.
- How can you reduce, or possibly completely eliminate risk?
- Identify risks that you might be willing to live with. Decide what risks you are willing to take, with a full knowledge of what you might lose.
- Keep track of your personal property. See if there is something you have that has increased in value and if it needs an increase in insurance. You do not want to make sure that your insurance is appropriate for your assets.
- If someone claims that you are liable for something, what will you lose, even if you are innocent? Claims can drastically reduce your net worth that you have worked so hard to gain. There may be a way to minimize your potential loss.
- Make sure that you have appropriate health insurance. People are living longer and healthcare costs are skyrocketing. Having enough insurance is imperative to protect yourself. You will probably want to talk with an insurance professional to assess your situation and needs.