Any financial plan needs to have a firm foundation, which is why protecting your income and your family is paramount when building your balance sheet. You and your BMP Wealth manager can identify the risks and look at the financial consequences of these risks.
There are four ways to manage risk:
- Accept the risk (go bungee jumping)
- Avoid the risk (don’t go bungee jumping)
- Reduce the risk (use three bungee cords)
- Transfer the risk (get someone else to bungee jump for you)
Critical and long-term illness and premature death are the biggest risks facing a growing family. Whilst it’s impossible to avoid all risks, a better and lower risk lifestyle can reduce them. However, transferring the risk to an insurance company is often the safest and cheapest way to mitigate these hazards.
As your balance sheet becomes more robust (so the effect of premature death reduces) and you become older (so insurance costs rise) there comes a time when you may decide to bring these risks onto your balance sheet. You and your BMP Wealth manager can decide when.