Tailoring Insurance Protection to Facilitate Wealth Accumulation

In our last podcast episode we talked about diversification, asset allocation and what mix of investments are right for your age, time horizon, risk tolerance, and objective. We talked about spreading risk over a variety of correlated and uncorrelated investments within your portfolio. You may begin to see a theme developing. You’ll remember from last episode we said the savvy investor doesn’t chase return; the savvy investor attempts to control risk and then let’s return come to them.

I think that advice can really help you as an investor. Don’t focus on the return unless you first understand what level of risk you are assuming. If you don’t you could find yourself in a lot of pain during a market correction or recession. As Warren Buffett once said, “Only when the tide goes out will you discover who has been swimming naked.” Don’t be that nude swimmer. Know what to expect when markets recede, because they will. Markets moves in cycles, Fits and spurts. Everyone should be aware of the level of risk they are assuming.

We are going to continue on the topic of controlling risk but from a different angle. Insurance is a financial tool. Perhaps you’ve never looked at it like that but it certainly is. We don’t purchase insurance because we want to make our local insurance agent happy. We purchase insurance because it makes financial sense to do so. Insurance can create an environment that allows us to accumulate wealth in an environment that has reduced risks. I can purchase a home and not have to worry about it going up in flames and losing all my money because I have a contract that protects me against such perils. If my wife passed away leaving me unable to work the hours I do because I have three children her life insurance policy would insure our family income does not decline. So in that aspect insurance allows me to build a family without fear of leaving the family in a bad financial situation in the event of death or disability. The societal benefit to insurance; perhaps we may do a podcast on that one day.

So the question I pose in this epode is how to we structure insurance protection to facilitate wealth accumulation? How do we build an insurance portfolio with wealth in mind that will encourage it, protect it and ensure it? Perhaps after this episode is complete you’ll look at insurance from a whole new perspective. What was once a dry topic that felt like a burden now becomes an exciting base to successful wealth accumulation. To hear more please listen to Episode 9 of the Dynamic Wealth Podcast with Macy Claypool, Crosby Advisory Group’s insurance and risk expert. http://crosbyadvisory.libsyn.com/episode-9