Managing Risk (Because Life Happens)

Sure, you feel great today. But there’s always risk around the corner. That’s why insurance was invented. While you probably won’t get in a car accident next week, lose your home in a fire next month, or die next year, premiums aren’t based on your expectations of how things will go. They’re based on calculated risk, which is an assessment of probabilities.

What is risk management?

It’s a way of prioritizing risk and organizing your financial life so that if catastrophe strikes, your assets will be protected.

Here are a few ways you might go about indemnifying yourself:

Disability Income Insurance (DI)

This covers your most important asset: you. In other words, DI insures your earned income against the risk of any disability that impedes your ability to work – ranging from illness to injury.  DI can take many forms, such as paid sick leave and short or long-term disability.

Car Insurance

This covers one of your most important assets: your car. Auto insurance runs the gamut of coverage, from accidents to liability claims against you. It also covers loss through theft, vandalism and natural disasters.
Additional risk factors to take into account are gaps in coverage (i.e., circumstances we think we might be insured for but aren’t). Some examples include additional drivers, tire damage, rental car coverage…the list goes on. Guard yourself against these gaps by keeping your insurance company up to date on changes that could impact your policy.

Life Insurance

A bit of a bummer, but this provides funds for your loved ones when you die. Coverage can change depending on your circumstances, so you’ll want to review it annually with your financial professional to close any gaps in coverage.

Are you already covered?

Depending on how comprehensive your benefits package is, chances are you’re already covered for many of these risks through your employer – specifically, disability and life insurance. When you leave your job, you might be able to take your plan(s) with you, provided your coverage is portable and you notify your employer before you leave.

You can’t be prepared for everything, which is why this is called “risk management.” Management means minimizing the risks you can and insuring against the risks you can’t. To insure all risk would be too expensive. Learn more about the different types of insurance here. In the meantime, remember that life is full of risk.

Being prepared for it is worth every premium.