The first and most important step in Personal Risk Management is to determine what you have and what you need to protect. Insurance is about protecting your assets and deciding what to do in the worst case scenario. The amount of insurance a person or family needs, depends on what they have to lose both in material property and financial security for the future. Success and building a secure financial foundation for you and your families future changes and grows as families learn to manage their risks and plan for life events.
What you insure, the value you insure for, and the deductibles you are willing to afford will determine the amount of insurance you need to be sure you family remains in the same standard of life no matter what happened. As families invest in their future, amass wealth, plan for retirement or provide for the needs of the family insurance should be one of the important things and part of sound personal risk management.
One of the big questions I was asked while working as an insurance agent was, “How much insurance do I need?”
The answer is always the same, you need enough insurance to protect your assets. The key things to look at when trying to determine your assets are:
- Personal Property: Keeping a record and important documentation about the personal property you own is a key part of insuring properly. Be sure to review your personal property inventory annually.
- Net Worth: What do you have in the bank and how much do you owe the bank? The more investment and savings there is, the more there is to lose in the event of a liability claim. Insuring for your net worth is an important part of strong financial planning.
- Future Worth: Your life and your health. Loss in this area would have huge effects on your family. Strong financial planning includes life and medical or health insurance as well as a sound retirement plan.
Once these issues have been identified then you know how much insurance you need to have. Protecting your assets basically means boiling things down to three categories:
- The things that you have which could be lost in a huge house fire.
- The things that you have earned and could lose if someone has a liability claim against you.
- The security of you and your family in the event of health, retirement or death.
Related Blogs:
- Personal Risk Management
- Risk Management: Protecting Your Assets.
- What is “Risk?”
- Retained or Accepted Risks
- Controlling and Reducing Risks
- Eliminating Risks
Glossary of Insurance Terms:
A | B | C | D | E | F | G | H | I | J-K | L | M | N | O | P | Q-R | S | T | U-V | W-Z
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