How Much Risk Can You Tolerate? Part 3 of 3
Over the past two months we have examined some of the risks that challenge most of us. It is almost impossible to avoid risk entirely. Knowing where the pitfalls lie and planning for them will certainly help. You might, however, want to consider shifting the risk to someone else, like a life insurance company. Life insurance companies are in the risk business and they have products and services that can assist you in dealing with risk. Some of these are as follows:
Segregated Funds provide both maturity and death benefit guarantees so as to protect your invested capital from loss. The investment options offered in these plans range from pure equity funds, to bond funds and fixed income investments.
Participating Whole Life offers comparable long term rates of return with the advantage of the growth being sheltered from income tax. This is beneficial for those who prudently diversify and maintain part of their portfolio in bonds or fixed income investments. In addition, the death benefit inherent in this plan greatly enhances the value of the estate.
Corporate Life Insurance can be used in business situations to reduce risk and to maintain the financial stability of the business in the event of the death of an owner or key employee.
Personal Life insurance is also an effective method of providing protection for beneficiaries if the overall value of the estate should decline due to market conditions. Debt, including mortgages should be life insured so as to ensure that the family is not saddled with financial obligations in the event of the death of the main provider.
Critical Illness and Disability Income Insurance will protect the financial stability of the family (and the insured) by not having to rely on funds already accumulated to provide for care or expenses in the event of a serious medical diagnosis or disability. This becomes all the more important in circumstances where there may be not enough funds accumulated.
Given current market conditions, many of these products may increase in price in the near future. Some products will also be greatly modified by reducing benefits or eliminating guarantees or withdrawn entirely. Some insurance companies have already gone on record to indicate that the available guaranteed Critical Illness Policies will not be offered in their current form for much longer. If you feel that this type of product could be of benefit to you now is the time to investigate.
If you are concerned with mitigating risk, now may be the time to consider shifting some of this risk to an insurance company to protect your financial future.