Insurance and Risk Management
Each day, you face a variety of risks–risks to your life, your health, and your property. Although you can’t eliminate many of these risks, you can take steps to guard against financial losses. That’s where insurance comes in. If your coverage is sufficient, insurance can provide both peace of mind and financial security to you and your loved ones. Many types of insurance coverage are available to you at Tevis Investment Management.
Life insurance provides funds for your surviving loved ones when you die. Your family can use the proceeds to meet a variety of goals. For example, they can use them to replace income lost as a result of your death, to meet periodic expenses, to pay debts you’ve left behind, to help with college tuition and retirement, and to pay for your final expenses and estate taxes. The proceeds are typically paid as a lump sum but may also be paid in installments.
You can obtain life insurance coverage through work, through another organization (e.g., a club or association to which you belong that sponsors a group policy), or by purchasing an individual policy directly from an insurance company. The two basic types of life insurance are term life and permanent (cash value) life. Term life provides life insurance coverage for a specified period of time, while permanent insurance provides protection for your entire life. Permanent life insurance can be further broken down into several types, including whole life, variable life, and variable universal life.
The threat of a major disability poses one of the greatest risks to your income. A serious illness or injury can put you out of work for a prolonged period or even permanently. If you had to stop working, how would you meet your expenses? Disability insurance policies pay you a benefit that replaces part of your earned income (usually 50 to 70 percent) when you can’t work. You may be able to obtain short-term or long-term disability coverage, or both. In general, disability insurance can be split into three types: private insurance (individual policies bought from an insurance company), group policies typically provided through your employer, and government insurance (social insurance provided through state or local governments).
Long-term care insurance
Your chances of requiring some sort of long-term care increase as you get older. Will you have the financial resources to fund a prolonged nursing home stay for yourself or a loved one? Long-term care insurance pays a selected dollar amount per day (for a set period) for the type of long-term care outlined in your policy. Depending on your policy, care can be provided in a variety of settings, including private homes, assisted-living facilities, adult day-care centers, hospices, and nursing homes. Most policies provide that certain physical and/or mental impairments trigger benefits. The cost of a policy depends on many factors, including the types of benefits, your health, and your age when you purchase the policy.
No matter how careful you are in running your business, accidents happen. If you’re a business owner, you’ll need to plan for these and other risks. You may be interested in several different types of insurance coverage–property and casualty insurance, liability insurance, and group health, life, and disability insurance coverage for your employees. You can buy various types of insurance protection separately, or you can purchase one package that covers many potential hazards. You can also use insurance to protect your business against the loss of a key employee or to transfer a business interest at your death or disability.
An annuity is a contract between you and an insurance company that allows you to accumulate tax-deferred earnings. When you purchase an annuity, you pay a premium, which the insurer invests in a mutual fund, real estate portfolio, or fixed income account, according to your financial objectives. On a specified date, you may either withdraw part or all of the accumulated cash value, or annuitize the annuity contract. If you annuitize, the insurance company distributes a specific amount each month for your lifetime or perhaps for your and your spouse’s lifetimes. You choose the time and method of payment most appropriate for your income needs and tax situation.