Vital to any financial strategy is the appropriate risk management plan

A well constructed risk-management plan should consider the risks that can be avoided, the risks that can be accepted, and the risks that should be insured. The goal is not to profit from an adverse event, rather to continue with your wealth plans despite any contingency.

Mitigates the financial risks during wealth accumulation, when income plays an important role in servicing investment costs. Financial analysis is crucial to establishing a relevant risk management plan.

risk management explained

Most people have insurance cover for their homes, contents and motor vehicles as a matter of course and most superannuation schemes provide some level of life insurance cover. However, few of us consider the potentially devastating consequences of an unexpected injury, life-threatening illness or permanent disability.

Have you done everything you possibly can to ease the financial burden on your family if this should happen to you?

Getting the right risk strategy for your needs

Having a sound risk management plan in place will help ensure your financial concerns are taken care of, should this ever happen, so there are no financial concerns. This provides emotional relief and freedom to address the many other issues that people in these unfortunate circumstances are forced to face. Nexus Private can work with you to help ensure you have the right risk strategy in place.

Getting this plan prepared with professional assistance is essential as some policies can have important implications from an estate planning and tax perspective. Here at Nexus Private we take a holistic approach to all the services we offer our clients. This enables us to collaborate with insurance providers, accountants, solicitors and others through professional partnerships to bring together a combination of elements to suit each individual’s needs.

For more information on risk management as a strategy there is a whole section devoted in our ebook, available for download here Top 5 Wealth Creation Strategies for Modern Australians.

Income, family and lifestyle and covering the mortgage are the essentials when approaching risk management for the first time. Any income protection strategy, for example, should provide a replacement income stream should you be unable to work at your usual occupation as a result of injury or illness. This is vital to maintaining the status quo when everything else around you is in a state of upheaval.

There are a number of approaches to covering family and lifestyle issues…

  1. Trauma cover, for example, is a diagnosis only insurance that pays a benefit if you are diagnosed with an illness like cancer, heart attack, stroke and a number of other ancillary conditions.
  2. Term cover is activated in the event of your death. It pays a lump sum benefit to cover the needs of your estate, and can be activated earlier in the event of a terminal illness, to cover medical expenses.
  3. Income Protection Provides a replacement income stream should you be unable to work as a result of of injury or illness.
  4. Total and Permanent Disability Insurance benefits are paid when an injury or illness prevents you from ever working again.
  5. Mortgage protection policies, while having the same end result i.e. meeting your mortgage repayments, differ significantly from each other. They can be, for example, a combination of life, income and total and permanent disability insurance, or a stand-alone product. There needs to be clarification that the mortgage will be paid out fully in the event of your death.

Insurances in Superannuation for improved Cash Flow.

Today, most insurance premiums can be paid with superannuation monies if structured correctly. This strategy can reduce the burden of the out of pocket expenses associated with full cover. Nexus Private will ensure that all your risk management needs are met when preparing your plan. Assessing your insurance needs along-side your your investment goals and estate plan can often result in better outcomes for beneficiaries and your cash-flow.

Insurance cover still best method of protecting assets and wealth

Adequate insurance cover is still the most effective method of protecting assets and wealth. The mistake many people make is in confining their definition of protection to events like fire, flood or storm damage, traffic accidents and other similar occurrences. Not acting to protect their income almost negates these other insurances, because without an adequate income, they cannot continue to keep their physical assets insured either. Imagine the stress this would cause you and your family should you ever find yourself in this situation.

A vital part of any financial strategy is having the appropriate risk management plan. It provides you with the peace of mind knowing that should the worst happen, the financial issues will be taken care of. There will be enough in the way of emotional and psychological loss to deal with, without having enormous financial burdens. Contact Nexus Private and set us to work on your risk management plan today.

See why portfolio growth improves substantially when coupled with the right financial structure

This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. We strongly suggest that you seek professional financial advice before acting.