Risk Planning
Why Risk Planning?
“Better be Safe than Be Sorry”
Risk Planning (Insurance) is an important aspect of financial planning because it helps to protect individuals and organizations from financial losses due to unexpected events or circumstances. There are lot of uncertainties and unforeseen events in life and in business for which one should have a risk mitigation plan. Insurance can provide a financial safety net in case of events such as accidents, illnesses, or death, which can result in significant financial hardship without proper protection.
In the case of personal financial planning, insurance can help protect an individual’s income and assets in case of unexpected events such as accidents, illnesses, or death. For example, life insurance can provide financial support to an individual’s family in case of the individual’s death, while health insurance can help to cover the cost of medical care in case of illness or injury. Similarly, in the case of business financial planning, insurance can help protect a business’s assets and income in case of unexpected events such as natural disasters, liability claims, or loss of key personnel.
In addition, insurance can also provide peace of mind, allowing individuals and organizations to focus on their goals and aspirations rather than worrying about the potential financial impact of unexpected events.
What is Risk Planning?
Risk planning in personal financial planning is the process of identifying, assessing, and prioritizing potential risks to an individual’s financial well-being and developing strategies to mitigate or manage those risks. This can include identifying sources of financial loss, such as unexpected expenses, job loss, or a market downturn, and taking steps to protect against those risks.
Examples of risk planning strategies in personal financial planning include:
- Purchasing insurance: Having insurance can help protect an individual’s income and assets in case of unexpected events such as accidents, illnesses, or death.
- Building an emergency fund: Having a savings account set aside specifically for unexpected expenses can help an individual to avoid going into debt or having to sell investments during a market downturn.
- Diversifying investments: By spreading investments across different types of assets and industries, an individual can reduce the risk of losing money due to a downturn in a specific market or sector.
Our Approach
We understand the current financials of the individual and family like income, their liabilities, their future goals etc. We create a plan wherein in case of any unfortunate event, the family should have sufficient insurance coverage which can take care of their financial requirements.
We feel the dreams are dependent on current and future income of the bread winner(s) of the family and there are 3 ways in which this future income can stop,
1. Untimely Death
2. Disability due to an accident
3. Critical illness
We calculate the Human Life Value HLV of the earning member and suggest to have a Term Insurance, Health Insurance and Personal Accident Insurance
We also help our clients by making them understand the importance of emergency fund. We work with them on their emergency fund requirement and suggest different ways of planning for it.