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Chapter 5Risk Management

A Careful Examination

Often in the financial sales world, a focus tends to get placed on buying (or being sold) a product over examining the roles, benefits, and trade-offs of insurance in an individual's overall financial picture.

Insurance and risk management conversations with clients often are limited to: here are all the insurance products on the product shelf, and here is why you need all of them.

What companies often teach their insurance agents is all that people are left with: scare them, tell a story, and offer a product-based solution. A singular focus that is not broadened by a bigger context easily strays into the realm of “when the only tool you have is a hammer, everything looks like a nail.” Yet, clearly, insurance products are not a solution for every problem.

In this chapter, we provide a detailed examination of the roles and trade-offs that insurance provides, which are often missing from the discussion. We hope you find this section informative as it is sometimes omitted from countless financial planning books, advice books written by financial advisors, and even from the training materials from insurance-based financial designations, including the Chartered Life Underwriter (CLU).

What You'll Get Out of This Chapter

As a professional, you have probably had many conversations about insurance—but unfortunately, many of those conversations have been focused on insurance products rather than the underlying rationale for those or ...