Risks
The Freemans are liable to a number of risks. The first one is the risk of death which is inevitable. This arguably forms the basis for signing for the life assurance policy. Another risk that the Freeman’s are endangered to is if any of their sibling’s death comes early. Another risk is that since they have not permanently insured their vehicles, then the Porsche they want to buy for Colin may end up not benefitting him. This is also attributed to the fact that they have not subscribed to the snowmobiles (property or liability)
Insurance Assumptions
One of the insurance assumptions in Freeman’s case study is that the Freeman’s will have faithfully paid their premiums up to the retirement age (62) so that the compensation can be guaranteed. Again maturation of some insurance policies is pegged on the Freemans’ ability to abide by the insurance policies up to the retirement age.
Another assumption by the insurance company is that the inflation rates won’t exacerbate beyond the normal levels that will hinder the compensation process. At the same time, there’s some assumption that the GDP growth rate will be constant (at 2-75%) or increase rather than decrease.
Another assumption is that no beneficiary will succumb to death before the maturity of the contract. In the life assurance contract, should Laura Freeman die before her husband, then that will be a loss. Another assumption that the insurance company makes is that the banks’ lending rates will maintain or decline. Another assumption is that the investment return rates expectations will continue to be high. As a matter of fact, it has to surpass the 8% that is charged on the total investment portfolio.
Freeman will not incur any losses associated with disabilities before the time of the maturity of the Long term disability.
Insurance Goals
Insurance goals are undoubtedly business-oriented goals. They include sales, marketing, and operating goals. The operational goals are the most important as it concerns the effective running of the insurance company while guaranteeing customer satisfaction, growth of the insurance team, and overall governance competency, among others. The sales goals entail the Quarterly revenue statistics, the short-term or periodical sales, as well as long-term sales. From Freeman’s case study, therefore, the insurance has achieved most of their goals as it can be seen that they have reached many clients and sold many policies. As a matter of fact, the insurance company has sold many policies to Freemans’ families and workmates.
Again, some of the policies sold are short-term, which guarantees the insurance companies’ high liquidity. Additionally, some of the goals are intended to add value and bring about customer satisfaction which is the reason George Freeman has invested in quite a number.
According to the risk tolerance questionnaire, George Freeman has subscribed to an investment that grants him the chance to defer taxation payments of capital gains to future years, the effect this has is that it minimizes compensation. Again, in the risk tolerance questionnaire,the Freeman’s have agreed on having a low level of liquidity on their investment ratio. This means that the investment return rate is kept at its low.
According to their plans of bettering their children it will need a constant flow of income for the family to be able to pay for the wedding of their daughters and but a car for Porsche foroloiv Colin. In most cases when a family opts to plan for the future, they should put most of their money in businesses that can generate more money to balance it with the current expenditure and the money at hand. Having the hard assets in the case where an individual wants to better the lives of their children ensures that they will be having some of the hard assets can back up the dream as they are not expected when they turn 23 years.
Developing a business to better the company instead of saving will ensure that all the effect on inflation of the money kept. Without putting up the money where it can making some interest there is a possibility that by 23 years when the children will be claiming money for the different t activities that parents wand to an on presently.
One of the major risks that most of the people face is failure of the business, value decrease of properties, type of the businesses an individual conducts, and the amount needed to be put aside by the future plans. With the solving of the challenges above, George and Laura can be able to live well in the society with the lives of the children made easier in the case of George’s passing. Having hard assets will be one of how past was enable one large making a step forward to ensuring that the things are kept in order. Looking into the future will ensure that George and Laura are blessed to make the right decision. Uuu
Yy
Leave a Reply