Financial Security

There have been so many instances of malfunctioning financial securities over the past few years. Because of relative unpredictability of the global economy, many individuals have also been suffering from great losses in their monetary investments. If not properly addressed, greater money depreciation may be expected.

The financial security that provides a certain level of credit risk is the insurance rate premiums. Apparently, most households and individuals are involved or have invested in one insurance policy or another. Probably, insurance accounts are flooded among financial institutions which offer them (Insurance, 2007).

Because of such condition, credit risks may well be spelled out especially if one is entirely dependent on the policy of an insurance company. For example, I have an insurance program with a specific company. However, the liquidated assets of this institution have started to devaluate and become non-performing assets over the market it is intended to be active. All assets are converted to cash to strengthen the reserves of the institution (Commonwealth of Pennsylvania, 2006Z).

In such a case, all members of the insurance program attached to the assets may need to contribute largely to recover. Of course, this will happen indirectly since the contributions of the members will be used. On my part, I will also need to input my contributions unknowingly. It only makes sense for the company to allocate my investments since they are very much available. However, if something goes wrong with the planning and the office was not able to use the external money efficiently, then I will be on great credit risk.

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I can lose all of my possible claims and may even be forced to get a loan from other creditors if the personal budgetary plans are to be broken.

References

Commonwealth of Pennsylvania. 2006. The Liquidation Process. Insurance Department. Retrieved December 3, 2007 from http://www.ins.state.pa.us/ins/cwp/view.asp?a=1285&q=539458.

Insurance-Frank. 2007. When To Get Liability Insurance For Your Business. Insure-Catati. Retrieved December 3, 2007 from http://insure.catati.com/.