Risk Insurance

Typically, you would expect that you would earn an income and grow your assets until you retire and then those assets would be depleted over your retirement, possibly with some left for your estate.

But what would happen if you were seriously injured or had a serious illness sometime before you retired? Or if you died? You would lose your ability to earn an income and you – or your family – would have to draw down your assets to survive (see the red line in Chart 1 below). Of course, your plans for a financially secure retirement for you and/or your family might also evaporate –depending on the length of time you were unable to earn an income.

That’s where risk insurance comes in. Depending on the type of cover, it can fill the gap in assets, and it can replace your lost income. In other words, risk insurance can help keep you on track financially – in case an unexpected tragedy causes you to lose the ability to earn an income.