Risk Management: Financial impacts that may be overlooked

Financial planning is an on-going process between the client and the planner, where the Planner fact finds, compiles and analyzes the data, with the end process of making recommendations to possible impacts or financial risk to his Client. However, there will be instances where some impacts may have been overlooked.

(My opinion is that you should have a financial planning review at least once a year or when there are changes in your lifestyle, a change in marital status, job or career, occupation, etc. Similarly, you should review your investments at least once a year or when there is a change in Market trends. Read my related blog on Market trends – which direction, North or South? And now to the subject matter….)

Risk management. You would be familiar with the following:

·         Hospital & surgical expenses and outpatient expenses

·         Retirement funding

·        The event(s) that would trigger a potential loss of income of the  breadwinner (and/or spouse)

·         The event(s) that would trigger a temporary loss of income, say five years

·         Child education funding (local or foreign) and Child protection

·         Mortgage protection,  Personal Accident, etc

More often in our profession, we have come across the following areas of financial impact that had been overlooked and like to share with you (for your attention):

1.   Disability Income (unable to perform own occupation, for e.g. lawyer, teacher – loss of voice, surgeon – temporary unable to perform surgery, etc)

2.   Cost of last expenses (regardless of insurability)

3.   Gender illness (male or female) or child illness, etc

(With that in light, I hope the above would throw some thought provoking questions and you may wish to re assess your financial risk.)

In relation to the above, the questions I would pose are

(1)What’s your potential loss of income in the event you are not able to perform your own occupation? Risk transfer?

(2)Have you thought of transferring the risk of emergency funding and cost of last expenses, in the event of premature death? Even though one is not insurable!

(3)What’s your potential loss of income (or additional expenses) in the event of diagnosis of male, female or child illness? Additional expenses for nursing care for your sibling, spouse or child.

With a possible new 'light' to risk management, I would recommend that you seek your ‘financial planner’ for more details.

Meanwhile, please feel free to contact me if you have any queries relating to the above topic or any other articles I have published.