If you ever study or deal with matters of a monetary or financial nature, then you hear certain terms. Sometimes, you might come across particular phrases or terms and not understand what they mean. If that’s the case, it’s understandable if you find yourself wondering just what is financial solvency?
In the realm of finance and business, financial solvency is described or defined as the degree to which a company’s or organization’s current assets exceed the liabilities of that same company or organization. Financial solvency is also alternatively defined or described as the power of a business to responsibly meet its longer-term fixed expenses necessary to engender future growth
A simple example to understand all this can actually be done on an individual basis, as a working adult is basically a business of one. If his or her income, savings, investments, property, and other assets are enough to keep paying monthly bills and reducing the person’s debts over time, then his or her net worth is going up over time. That is considered financial solvency.
On the other hand, if a person is seeing their amount of debt rise over time, even if they’re paying monthly bills and minimum debt payments, then they are financially insolvent on an increasing basis. This is often measured using credit scores.
Judging the financial solvency of a company is something many investors do in determining whether or not to buy their stock. It can also impact stock value.
Lenders often look at the financial solvency of an individual in determining the size and interest rates of loans they offer, much less whether or not to offer one at all. This measurement of the financial health and wellness of any individual, company, or organization should be used to map out a better future.
Insurance companies should operate on incredibly tight margins. If every client they represented used their insurance policies at the maximum values, the insurance industry would simply collapse. With that in mind, insurance companies try to save money at every turn, utilizing intense mathematical gymnastics to figure out how they can pay you as little as possible when something happens to you. While insurance companies will try to scare you into accepting their low-ball offers, you have to stand strong and understand what your true worth is. At the end of the day, your insurance agent is not your friend. Do not let them try to play around with you and your family’s livelihood.
Settlement Agreement Deadlines
One tactic many insurance companies employ is trying to force you to sign a settlement agreement while you are still undergoing medical treatment. While it might sound like a good idea to get some money right away, you have to remember that insurance companies have years of experience with dealing with clients suffering the same injuries or damages as you. They know how much money you are going to need. By setting up an arbitrary deadline, they are trying to make you agree to a settlement that is beneficial to them.
Blaming Injuries On Pre-Existing Conditions
As we have established, the entire goal of insurance companies, like any other company, is to make money. If you allow insurance companies to access your medical records (do not sign anything that authorizes this unless you are signing up for insurance that requires it), they will use that information against you. For example, if you were in a car crash that left you with a concussion, the insurance company might use a previous injury or pre-existing condition to get out of paying you what you deserve. They will say that you were aware of the risk, and they will charge you more in premiums. Do NOT let them control you like this.
Disputing the Severity of Your Injuries
This is pretty cookie-cutter stuff. Do give the insurance companies any reason to think you are in better shape than you actually are. Do not lie about your injuries, but be realistic about them throughout the entire process. If you tell the truth, and have your doctor to vouch for you, you will be fine.
If you have insurance for injuries and sustain a serious injury, do not let insurance companies bully you. Understand your worth, and keep records of everything. There is no reason why you should receive less compensation than you deserve.
When it comes to insurance, people will try to sell you a million different kinds. Remember in Family Guy when the salesman tries to sell Volcano Insurance? It’s hard to say why insurance salesmen get a bad reputation. Perhaps it was from when they had to sell insurance by ringing on people’s doors. But today in the world of online where people can get a quote at their fingertips, what insurance is actually worth purchasing?
Without your health, you have nothing. You can’t work and earn money for your family if you sick or injured. With hospital bills in the thousands of dollars range, having health insurance can help mitigate those costs. Even if you are “never sick” what if you and your beloved decide to have a baby? Having health insurance can make sure that you don’t go into debt before the baby even arrives.
In the event of an unexpected death, don’t put the financial burden on your loved ones. Having life insurance can help your family and friends pay for the cost of a funeral, coffin, wake/shiva and a gravestone, as well as provide them with a bit of a temporary cash flow as your income will now be gone.
Homeowner’s insurance is required if you are to get a mortgage from the bank. They want to make sure in the event that something happens the house is insured. In the event of a natural event such as a hurricane or tornado or fire, or from a crime like a burglary, replacing everything you own is a LOT of money. Insurance can help you rebuild. If you rent, then having renter’s insurance is advised.
Considering most states by law mandate that you have it, it’s something you definitely need. If your car gets damaged and parts need to be replaced, insurance will help pay for the cost, so you can spend time on recovering if you are injured.
As you can see, insurance can help you if you are ever in trouble with either your home, your car or even yourself!
One of the main themes of this blog will not just be to make you hate insurance companies but to suspend your belief of them when you talk with them. Insurance companies could not possibly give out great deals to everyone, because then they would never make any money. Sure, you need insurance, but there are types of insurance that are a huge waste of money (we will get into those later). What you need to do is identify what you need for your insurance, and let your agents know your expectations heading in. If you find yourself believing everything your agent tells you, please remember this video. Just like with any other product, it is in your best interest to be an informed consumer when you make the decision to purchase insurance. If you don’t do so, you will either wind up woefully underinsured or grossly over-paying. Neither of those sound very good to us.