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The Ultimate Financial Plan: Balancing Your Money and Life by Tim Maurer, Jim Stovall

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CHAPTER 5

The Gift of Discernment

RISK MANAGEMENT DECISIONS

If you purchased insurance for everything for which it was created, you wouldn’t have any money left. You manage risk, however, every day whether you know it or not. Do you wear a seat belt? You’re managing risk. Are you a boater? You’ve made a risk management decision. Do you look at the number of calories or grams of fat before you eat something? You’re a risk manager. A greater understanding of risk management techniques will help you make better insurance decisions. You’ll know when you need insurance or need better insurance, and you’ll also know when you need less or no insurance at all. Proper risk management results in less stress—because you’re not wondering about issues you haven’t addressed—and a healthier personal bottom line.

There are two broad risk categories on which we will focus: personal risk and financial risk. Many single risk management decisions have both personal and financial risk components. For example, the invigorating pursuit of mountain climbing has the personal risk of injury, even fatality, and the financial risk of the cost of medical bills. Regardless of your action or inaction, you have made a risk management decision.

Timeless Truth

To paraphrase the Surgeon General of the United States, life may be hazardous to your health. All of us know that bad things happen to good people, and none of us are destined to get out of this life alive. There are few things less sexy, attractive, or ...

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