Are You Adequately Addressing Your Most Catastrophic Risks?

Identifying your current risks, ranking them in importance, and then reducing or eliminating your most catastrophic risks is an important strategy to become more financially secure.

The risks you face often change over time based on your age and circumstances.

If you are a single 30-year old with no financial dependents, your most catastrophic risk may be a permanent, total disability, which could reduce your future earned income to zero.  A long-term disability insurance policy would hedge this risk, by providing a stream of income to cover your expenses and allow you to invest for your retirement, or in this context, to cover your expenses during your remaining lifetime after the long-term disability insurance policy stops making payments.

If you are a 40-year old with a stay-at-home spouse and two young children, your most catastrophic risks may include a long-term disability or death.  A long-term disability insurance policy and life insurance policy would hedge these risks.

If you are a financially independent 65-year old, your most catastrophic risks may involve ways of rapidly depleting your accumulated nest egg, such as through a lawsuit, a prolonged stay in a nursing home, or running out of money due to financial mismanagement.  Asset protection strategies, a long-term care insurance policy, and a proper retirement income plan would hedge these risks.

Ignoring or inadequately addressing your most catastrophic risks is a classic way to jeopardize you or your family's financial security.

If you are a prospective client and would like to learn more about hiring us for a financial consultation, where, among other things, we would assess your current situation and provide risk management recommendations, please visit our Schedule Meeting page.



Mike McErlane, DO, MBA, CFP^®, CFA^®, RICP^®, EA, MCEP^®

Mike McErlane is the owner and founder of Comprehensive Financial Planning for Doctors, LLC based in Frisco, Texas.

Comprehensive Financial Planning for Doctors, LLC (CFPFD) is an Investment Adviser registered with the Texas State Securities Board.  Registration of an Investment Adviser does not imply any specific level of skill or training.  CFPFD only transacts business in states or jurisdictions in which it is registered or exempt from registration.  A copy of CFPFD's current disclosure brochure is available through the Securities and Exchange Commission's Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov.

The opinions and analyses described are subject to change at any time without notice.  Any information is considered general and is not intended to provide any specific advice or recommendations.  Your use of the information is at your sole risk.  You should consult with your financial advisor, attorney, tax advisor, insurance agent, or other professional advisor before taking action on any information or implementing any strategy.