The thing about risk is that when you realise you’re vulnerable it’s usually too late to do anything about it!

Risk Insurance, Accident And Insurance ThemesYou’ve worked hard and diligently to build your wealth, so the last thing that you want to do is risk all that hard work by not adequately protecting your assets. It still amazes us that so many people fail to pay any attention to the various risks that could quite easily affect them and often when they do they decide not to protect themselves.

 

Risks can arise from a number of different of sources, some of these being:

  • Litigation
  • Insolvency events
  • Personal Injury
  • Fraudulent activity
  • Partnership disputes
  • Matrimonial disputes
  • Partner insolvency
  • Health failure
  • Severe Weather events
  • Debtor Collapse

At CFG we consider that identifying and managing your risks is one of the most important considerations when purchasing assets or undertaking borrowings. As part of our service, we will bring to your attention areas which we consider represent a risk to your overall financial health and offer suggestions on how to minimise your risk exposure or at least monitor it. We achieve this in the following ways:

Ownership structures

One of the most effective ways to protect your assets is by correctly structuring the ownership of these assets in a manner that provides protection from potential litigants. Whether this be via the use of a Corporate Entity or by placing the title in the name of an individual who has less or no risk profile. It’s best to establish the structures from the start as changes at a late date can prove to be expensive.

Ownership agreements

 If you own assets with other individuals or entities then it’s important to have an agreement in place that details what will occur in the event of either party experiencing an event that may risk the asset. Establishing the terms of the agreement from the start of the ownership can save a substantial amount of stress to all parties if an event ever occurred.

Insurance on your assets

 Most people insure their assets, but as time goes by they fail to review this insurance to ensure that it’s adequate for their current needs. The insurance policy that was adequate for when you first purchased that property may no longer provide sufficient coverage a few years down the track when the associated costs of replacing an asset has increased.
Undertaking a regular review of all your insurances to ensure that you’re adequately covered is something we recommend to all our clients. The recent floods in Queensland have made many people aware that they are often not covered for what they thought they were.

Personal Insurance

 We know from experience that the majority of Australians are under insured in this area. For many people an accident or a major health event will significantly place their assets at serious risk as they’ll struggle to meet their commitments.

We consider that being adequately covered for Income Protection, TPD and Trauma insurance is very important. We’ve seen on a number of occasions just how important insurance is when an event occurs as it allows you to focus on recovery and protects your assets from the requirement of a fire sale.

Having adequate Life Insurance is also very important. In the event that the worst case scenario ever occurs, it’s important to ensure that your spouse and family members are not burdened with debt that they’re unable to service and which compromises their life style.

Loan Protection Insurance

 We live in volatile times and operate in a global economy where exchange rates can fluctuate dramatically and industries can be made redundant virtually overnight. Job security is no longer a given and if you work in an industry or for an employer that you consider may be fragile or vulnerable to shocks, then having insurance to protect your loan payments for a number of months in the event of redundancy, can go a long way to protecting your assets. This insurance can give you time to find another job and re-establish yourself without having to fire sale assets.

Landlord Protection Insurance

 Having tenants trash a property and rendering it uninhabitable for a period of time, as well as the extra costs associated with repairing the property, is another possible risk. Usually, the bond is not satisfactory to cover the extra costs that you will incur and this is where this insurance can assist. This risk can be mitigated by engaging an experienced and highly reputable property manager.

Business collapse

 Bad things happen to good people. We see it all the time, where a successful business can be placed on the brink of insolvency due to the failure of a major debtor or just a sudden change in conditions. In this situation, swift action can often save you substantially. If your business or financial situation has suddenly changed, and you’re struggling to meet your commitments, then we can assist in the following ways:

 – Negotiating with your lenders to either restructure your current loan facilities or provide you with a period of time to either improve your business or realise the sale of your assets at their best value

 – Negotiating with your creditors on your behalf in an attempt to arrange an informal agreement that will allow you time to turn things around or restructure.

 We can either assist you with all of the above areas or refer you to one of our partners that may specialise in one of these areas. If you would like to have your overall position reviewed, or would like advice on any of the above areas, please contact us.

Also, we often cover these issues in more depth in our newsletters.  So  if you are not already a subscriber then take a moment to sign up now.

“The first rule in business is to preserve your capital. The second rule in business is to refer to rule 1”….Warren Buffet