In a holistic view of risk, whether you choose to bear or insure liabilities and risks that can be insured should not be separated from your approach to investment risk. It is all part of our service.
The general principle of insurance is that low-probability events with major impacts are relatively cheap to insure and insuring against such risks is always sensible. That’s why we insure against the risk of fire destroying or damaging our home.
Many of our clients are comfortable with existing broking arrangements or even place their own business using online price comparison websites. Families with substantial property assets, valuable contents and expensive cars, however, are likely to benefit from specialist brokers best suited to placing business competitively and handling claims, all with a high level of personal service. Though we are authorised as a broker, where a client wants to review their arrangements we prefer to refer to a specialist: Gallagher.
In our working lives, the extreme risks that most threaten our well-being relate to our capacity to earn. These are best laid off through life assurance and critical illness insurance, both of which we will advise on and arrange. Life cover and income protection is often provided by clients’ employers but there may also be scope to cover the impact of misfortune striking their spouse.
Choices in retirement
In retirement, wealthy individuals are unlikely to need this catastrophe insurance as it is financial capital that secures spending, not their ability to work, and planning may reveal that the amount of capital is adequate to cover eventualities without further reliance on insurance. Taking a high excess can deal with frequent small claims whilst keeping cover for very large claims with a much lower probability. Unfortunately it is not possible to retain medical cover only for the ‘tail risks’ that are subject to very high private costs and may increasingly be rationed by the NHS.
Powers of Attorney
A separate but linked aspect of risk management is how to protect financial decision making if incapacity strikes. This can – and should always – be planned for by having in place Lasting Powers of Attorney (or its predecessor, an Enduring Power of Attorney). This ensures that the family retains control over financial decisions should one of them become unable through mental incapacity. It’s free (barring only any legal advice which may anyway not be needed) but can make an enormous difference. It’s not just about the elderly. It’s a must.