Risk management can be defined as "the identification, analysis, and economic control of those risks which can threaten the assets or earning capacity of an enterprise" The ways of managing risks are:
Most of us neglect very crucial areas in personal finance matters that we take insurance as an investment vehicle trying to maximise the returns but forget to ensure whether we are adequately insured or not. we should not go for many insurance policies but focus on the right combination of total risk management by evaluating the individual HLV. we must purchase the right combination of plans that can take care of not only our young children but also our elderly parents in the times of life’s uncertainties . it is prudent to opt only for pure term insurance policy with an optimal risk cover.
PURPOSE OF INSURANCE
- The purpose of insurance is to minimize the loss or damage arising from unforeseen circumstances.
- Insurance is relevant only when there is uncertainty as to the happening of the event.
- Insurance envisages sharing of similar risk.
Insurance is critical in life, indemnifying several potential risks we or our family may be exposed to. Most of us do not have adequate insurance cover because we are unaware of what an optimum insurance cover is, it is cardinal that we educate our clients for optimum life and health insurance cover from the beginning.
Indemnifies the risk to life.
Personal Accident Insurance
Covers against major accidents or physical loss arising due to death or disablement due to accidental bodily injury.
Mediclaim & Critical Illness Insurance
Covers all medical treatment expenses up to the sum assured
Travel insurance can bring the much needed peace of mind
Indemnifies the risk to this precious personal asset from the risk of fire, lightening, storm, explosion, inundation, theft, burglary and like risk.
Evaluation of insurance needs:
- In order to enforce the importance of an adequate insurance coverage, it is imperative that we identify our clients’ circumstances that may put him/her at risk.
- IInsurance portfolio review –we should review in-depth the insurance needs periodically.
- IHome Insurance: Many of us will agree that a home is an important asset, a prized possession for many individuals and so adequate home insurance is pivotal.
- Change in relationship status
- Change in income
- Change in household expenditures
- Change in lifestyle
- The number of individuals financially dependent on you and until when
- The contingency funds that will be required by the family
- The quantum of assets
- Outstanding liabilities
Adequate Life Insurance Coverage:
Life insurance forms the backbone of a well-designed financial plan, There are many facets that result in shaping one’s life insurance needs:
We use HLV method to evaluate the need for insurance cover in terms of money required to sustain the same standard of living by the family in the case of any unfortunate event happening to the bread winner of the family.