Summary Of The Nature Of Risk

1. One of the main objectives of all financial planning is the reduction of uncertainty associated with future income and expenses. 

2. Manpower ( the income-producing ability of the wage earners ) is a primary asset of both the family and business firm.

3. There are basically two methods for measuring the value of the wage-earner to the family or firm: the future income approach and the needs approach. 

4. The future income approach measures the present value of the wage-earner’s expected future income less taxes and the cost of supporting himself. 

5. The needs approach itemizes the family’s various financial needs in case of the wage-earner’s death or disability. 

6. The major causes of income impairment, in order of relative importance, are disability, death, retirement, and unemployment. 

7. The primary methods of meeting or reducing possible losses are loss prevention, loss retention, insurance, and annuities.