What is Financial Risk?

Financial Risk
In order to find out how much and what kind of insurance one must need, we need to understand the concept of FINANCIAL RISK. This should be the first step to determining whether or not you are fully protected!

The sad truth is 68% of Canadians feel that they are under insured with their current insurance coverage. 32% have doubts about their own policies.  Common questions being asked are “How much insurance should I get?” and “What kind of insurance is best?” or “What’s the least expensive type of insurance?” When the real questions should be “What am I trying to protect?” “How will my debts be paid in case I pass away prematurely?” “Do my dependents rely on my income?” “What kind of quality of life will my family have in case something were to happen to me?”

The concept of FINANCIAL RISK revolves around maintaining the quality of life for our loved ones in the event of tragedies like sickness, death and other different hardships that life may throw at us. And this is measured by how much debt we carry, our income, expenses, our dependents and etc. Hence, we must be fully prepared with the proper insurance and savings plan to combat the three basic financial risks:

  • Risk of Dying too soon

  • Risk of getting sick/hurt

  • Risk of living too long

The Risk of Dying Too Soon

The risk of dying too soon can cause a huge financial impact to a family. Many of us most likely have heard of one story or more of a poor fellow who passed away due to sickness or an accident. But many of us fail to realize the financial ramifications of such a situation. Or some just have that discriminatory thought of “Well… It’ll never happen to me.” But the clear truth is that it can happen to ANYONE. Premature death knows no age nor gender and it is one clear FINANCIAL RISK that must be addressed.

So what protects against this risk? LIFE INSURANCE. How much and what kind is determined by the needs of the individual and their family. Maintenance of lifestyle, mortgages, debts or any other final expenses like probate or estate taxes are the basic factors when designing a proper life insurance plan. Life insurance is the single most effective method to protect against this risk.

The Risk of Getting Sick or Hurt

While purchasing life insurance to protect your family is a good thing, clearly it is still not enough. While everybody only dies once, the problem with becoming critically ill or injured at work is that it can happen MULTIPLE TIMES. Imagine… how will you be able to pay your bills if you are unable to work properly because you experienced a heart attack? How will you be able to make your MORTGAGE payments if you’re undergoing chemotherapy because of cancer? Illness is just like premature death. It does not discriminate. But the scary part is that it is 6 times more likely to happen than premature death!

The first concern that pops into peoples minds when they become diagnosed with an illness is not “How will I get better?” but instead “HOW WILL I BE ABLE TO PAY MY BILLS?!” So what’s the most effective solution? CRITICAL ILLNESS INSURANCE & DISABILITY INSURANCE!

Wouldn’t it be nice to receive money $$$ from your insurance while you’re still alive, instead of having to wait till you die to get it? Wouldn’t it be great to receive extra money to pay for your MORTGAGE when you get sick and concentrate your energy on just recovery from your illness? CRITICAL ILLNESS & DISABILITY INSURANCE DOES JUST THAT! And in our opinion it is one of the most important insurance plans anyone could have!

The Risk of Living Too Long

But isn’t living long a good thing?! Not if you don’t have any income to support you! YES even in our golden years we still require a paycheck to pay for our needs. We need to be absolutely sure we do not outlive our money once we are retired. But what about the costs of taking care of us as we age?  Our golden years should be spent with our loved ones and doing the activities we enjoy everyday! Not worrying about where our money will come from just to make ends meat. So YES! Saving is how we could cover the risks of living too long. Vehicles such as RRSPs, Locked In Retirement Accounts, Annuities and Tax free Savings Accounts do just that! Long term care insurance can cover costs of old age in the future as well!

  • Risk of Dying too soon

    Life Insurance

  • Risk of getting sick/hurt

    Critical Illness Insurance, Disability Insurance

  • Risk of living too long

    RRSPs, LIRAs, Annuities, TFSA, Long Term Care Insurance


So everything revolves around maintaining our comfortable lifestyle, regardless of premature death, sickness, injury and even old age! Our financial plan must be able to cover all these in order to be fully protected! Therefore insurance is a necessity! And should not be taken lightly!

If you have any questions regarding insurance, or have inquiries about your own financial and risk management plan, please feel free to contact us! Our team of financial planners and licensed professionals will be more than willing to help you! We hope this small article gave you a deeper insight into understanding the basics of a proper risk management and basic investment plan!

Your Future Self Will Thank You!