What Is Risk Management?
Risk management is the art of managing risks efficiently, so that you can improve the chances of achieving your goals, come what may.
Risk management involves identifying risks, categorising them and managing the ones that can be managed. Now, when you begin to identify the risks involved in personal finance, you will notice that one of the most significant risks in personal finance planning is death.
You can navigate through every adversity to ensure your family’s goals are met when you are around. But what about when you are not around? How can you ensure your family's goals are fulfilled then? If you have loans and pass away before settling them, you would not want important assets like the house or the car taken away from your family because of the outstanding loans, would you?
Well, you can ensure your family enjoys a good lifestyle not only when you are around, but also when you are not around - with sound financial planning. One financial product that can help you be prepared and deal with the financial risk associated with death is life insurance. You can buy a life insurance plan to financially support your family and ensure they don't give up on their dreams and goals in your absence.
How Can Life Insurance Help?
When it comes to financial planning, most of us get confused about where and how to invest our money - should we invest in stocks, bonds, or real estate, for example. Life insurance is a good investment tool that is relatively simple and more affordable. Not only does it provide you with investment avenues, but it also protects the money you invest and your financial goals with an insurance cover.
Depending on your financial goals and risk tolerance, you can choose from a variety of life insurance plans. There are plans that will provide you with fixed returns that are exempt from tax. Some plans will offer returns that compound over time and beat inflation. Then, there are plans where the returns are tied to the stock market. And so on.
Not only returns, but life insurance plans also provide a life cover in case you are unable to continue investing due to a major life disruption such as death, disability, or critical disease. And, in addition to the promised investment returns, most life insurance plans also provide financial security to your family in case of your unfortunate death.