Risk Management Insurance: Property, Casualty, Life, Disability, and Extended Care
When it comes to creating a sound financial strategy, many people think of creating a diversified portfolio or making sure they’re regularly contributing to their retirement plans. But a good financial strategy also includes insuring against the unexpected and making sure that no matter what happens, you’re covered.
If you’re younger and have many years of life ahead of you, you might wonder why you need to consider disability insurance or life insurance. But the point of insurance is to expect the unexpected and make sure that you’ve taken care of yourself and your family if something happens to you.
Each type of insurance has specific coverages and restrictions, and some types of insurance make more sense than others, depending on your age. Talk with your financial advisor to ensure insurance is a part of your strategy.
- Property insurance may take the form of homeowners insurance, renters insurance, or insurance against a specific natural disaster, like flood or earthquake insurance. Property insurance typically covers the building itself and the contents within it should something happen. A rental policy will cover your possessions as a renter should something happen to your building. You’ve spent a lifetime building up your possessions; if everything were lost tomorrow, you wouldn’t want to outlay the funds to rebuy everything you own.1
- Casualty insurance protects you against claims or lawsuits made against you by outside parties. Casualty insurance is already bundled in if you have homeowners or auto insurance. For example, if someone falls down deck stairs because you failed to maintain them, the casualty part of your homeowners insurance would cover this type of claim.2
- Life insurance is a way of providing financial support to your loved ones after you’re gone. You’ll pay a premium, typically monthly or annually, and pay a death benefit to your beneficiaries after you’re gone. Death benefit money can be used to pay funeral expenses, mortgage or rent payments, and day-to-day living expenses. Younger people typically overlook this type of insurance, but life insurance should be a part of everyone’s financial plan.3
- Disability insurance protects you if you become disabled and unable to work. It’s helpful to think of disability insurance as insurance for your income. The two types of disability insurance, short-term disability (STD) and long-term disability (LTD), are typically offered as part of or in addition to the insurance options provided by your employer. STD typically covers periods of injury or disability from a few weeks to a year, while LTD usually offers several years of continuous income replacement after a work-ending workplace injury. These policies only typically cover a percentage of your previous income. Still, having at least some of your income covered is better than nothing.4
- Extended care insurance, sometimes referred to as long-term care insurance, is designed to help cover you after age 65 and provide in-patient or at-home care for a chronic condition. Extended care insurance can cover nursing homes, assisted living facilities, home health aides, and private-duty nurses. Extended care insurance is also less expensive the younger you are, so if you’re approaching 50, it’s something to start considering.5
Insurance is an essential part of your life and financial strategy. By preparing for the worst (while hoping for the best), you’ll be positioned to handle changes in your life and provide yourself with some protection against significant disasters or illnesses. Remember, you can’t control everything that happens in life, but you can create a plan that will support you no.
- https://www.thebalance.com/what-is-property-insurance-5201635
- https://www.investopedia.com/terms/c/casualtyinsurance.asp
- https://www.investopedia.com/terms/l/lifeinsurance.asp
- https://www.investopedia.com/terms/d/diinsurance.asp
- https://www.investopedia.com/terms/l/ltcinsurance.asp
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
Recent Buttonwood Articles
As we closed out 2025, our Investment Policy Committee (IPC) continued its work to refine strategies that balance risk, liquidity, and long-term growth. In our previous update , we shared how the inflation shock of 2022 reshaped our approach to fixed income and led to a more nimble, systematic positioning of bond assets. That proactive discipline remains a cornerstone of our investment process. As we wrapped up 2025, our Investment Policy Committee (IPC) continues efforts to refine strategies that balance risk, liquidity, and long-term growth. With the Fed reducing overnight lending rates for the third time, recent IPC discussions have turned to another critical focus area: cash management. Why Cash Strategy Matters Now With interest rates still elevated and market uncertainty persisting, many investors hold larger-than-usual cash positions. While cash provides stability, it also introduces opportunity cost if left idle. One of our IPC objectives is to ensure that excess cash works harder for you, without compromising liquidity for emergencies or near-term cash needs. Refining Our Cash Allocation Policy For our clients with larger cash needs (generally more than 5% or $50k of liquid assets in cash or money market funds), we are shifting to a proactive T-Bill management strategy, or other suitable investments based on goals and circumstances. For our clients holding less than $50k in cash or money market, we have retained money market for liquidity, but we have made a switch to the default money market fund we are using. Risk and Tax Aware Money Market Selection While yields are similar across money markets today, the underlying investments in each money market fund vary quite a bit. For example, Schwab Prime Money Market (ticker SWVXX) offers a slightly higher yield but invests in asset-backed commercial paper (ABCP), introducing a modest credit risk. In contrast, Schwab Government Money Market (ticker SNVXX), invests primarily in U.S. Treasuries and government-backed securities, making it virtually risk-free and often state income tax-advantaged. With lower risk and only about 10/100’s of 1% yield difference, our IPC has proactively transitioned clients from SWVXX to SNVXX, to prioritize safety and tax efficiency over a marginal yield difference. Connecting Back to Our Broader Strategy These cash management refinements build on the fixed income strategy we recently outlined. By reducing exposure to inflation-sensitive bonds and implementing a more systematic approach, we are positioning portfolios to be more resilient across potentially weaker or higher-rate environments. Optimizing cash allocations and minimizing credit risk within money markets reinforces the same core principle—protecting downside risk while prudently capturing incremental return opportunities. Looking Ahead As we enter 2026, our investment approach remains focused and disciplined. We continue to prioritize liquidity for cash needs, thoughtful risk management, and systematic investment strategies designed to adapt to evolving market and economic conditions. This proactive framework supports long-term portfolio resilience while remaining aligned with your financial objectives. If you have questions about how these updates may impact your investments, cash management, or overall financial plan, we encourage you to connect with your financial advisor at Buttonwood. Our team is committed to delivering personalized wealth management and asset allocation strategies—regardless of market or economic uncertainty. Thank you for your continued trust and for allowing us to coordinate your asset management as part of our Family CFO services.
How to Talk About Money with Family Over the Holidays. Whether your family is just beginning to plan or has been navigating financial decisions across generations
As year-end approaches, many clients focus on charitable giving—supporting causes they care about while optimizing their tax strategy. This year carries added urgency: the One Big Beautiful Bill Act (OBBBA) will significantly change charitable giving rules in 2026.
Maintain diversification as one of our risk management tools, focusing on our high-conviction ideas that tie with where we feel we are in the economic cycle.
Our Investment Policy Committee (IPC) remains focused on balancing opportunity with discipline as markets continue to react to shifting economic and geopolitical dynamics. Following a volatile start to the year, recent developments have created a more constructive environment for risk assets, though caution remains war
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law. Learn what that means for business owners.
Are you ready to explore the benefits of your very own Family CFO?
