(MONEY Magazine) – Kelsey Lewis is heart-wrenchingly cute, with blue eyes, brown hair and a galaxy of freckles that spill across her nose and cheeks. At age two, she loved watching The Lion King so much that she began repeating long sections of dialogue verbatim to her astonished mother. When a child that adorable and clever lives near Los Angeles, her mother's friends tend to whisper, "She should be in show business."

"Why not?" thought Kelsey's mom. Kathy Lewis, after all, had plenty of time on her hands. She had quit her job as a secretary when Kelsey was born and didn't have to earn money because her husband is Kyle Lewis, who at the time was the No. 1 motocross racer in Japan, making $350,000 a year. "My mom was getting bored and wanted me to try acting" is how Kelsey explains beginning her career at age four. "But she said if I didn't like it, I could stop doing it."

Kelsey did like it. After a few years of TV commercials, her first big break came at seven, when she landed a part in a music video for a song called "Family Portrait," by Pink. After that, when kids would see Kelsey at the mall, they'd squeal, "Aren't you the girl from the Pink video?" Lip-syncing Pink's lyrics, she played a tormented girl caught between warring parents: "I promise I'll be better, Daddy, please don't leave!"

It was a moving performance that attracted a top Hollywood agent and led to Kelsey's first film role. At the age of nine, she co-starred in the made-for-TV movie Samantha: An American Girl Holiday playing Nellie, an impoverished waif who is befriended by the rich girl next door. Today, Kelsey appears to be on the cusp of stardom, having recently come within a wisp of landing a part opposite Michelle Pfeiffer in the upcoming film I Could Never Be Your Woman.

For all of Kelsey's success, however, being a child actress is hardly glamorous. Three or four times a week, her mother picks her up from school, where she is now in the fifth grade, and they drive 90 minutes south from Lancaster, Calif. to Los Angeles for auditions. But she only lands three to five roles a year--mostly commercials and the occasional bit part in TV shows like HBO's Curb Your Enthusiasm. Kelsey is one remarkably resilient 10-year-old--"I'll just try harder next time!" she chirps--but right now she's no Dakota Fanning.

At first glance, the Lewis family seems to have the perfect financial foundation to support her development as an actress--especially since Kelsey's work has brought in about $70,000, after expenses, over the past six years. Her father, who returned to U.S. racing in 2000, makes about $140,000 a year with a Santa Barbara-based motocross team called Moto XXX. The Lewises have a hefty $250,000 sitting in a checking account, and Kyle's investments in mutual funds, real estate and boats give the family a net worth of about $2.4 million.

Upon closer inspection, however, cracks begin to appear. Now 35, Kyle plans to hang up his crash helmet in another year or two and has no firm strategy to replace the lost income. He has no retirement plan. Many of his investments are in expensive California real estate or sweat-equity projects that might not work out as planned. Perhaps most worrisome is that Kyle has no disability or life insurance, despite having a job that requires death-defying leaps on a dirt bike every weekend and that has caused him countless serious injuries over the years.

Though most people don't put their lives on the line at work, every family has to deal with risk, from market downturns to the death of a breadwinner. Motocross racers have a simple technique for coping with the obvious risk in their lives: denial. They simply can't focus on their jobs if they worry too much. This may sound strange at first, but let's face it: How many of us spend time plumbing the awful scenarios that could befall us?

Financial planners, on the other hand, are paid to worry. That's why Kyle's old friend Bryant Hayward of Wachovia Securities has been pestering him for years to create a plan. When Kyle finally gave in, Hayward blanched at the rickety state of the Lewises' finances. "It's an accident waiting to happen," he concluded, unaware of the grim double meaning in his words.

During the filming of a scene in Samantha in which Nellie gets into trouble, Kelsey had to make herself cry. So she thought about her beloved dogs--Bailey and Zuke, chows that resemble muscle-bound teddy bears, and Roxy, a shaggy Lhasa Apso that licks anything that moves. Then she imagined them getting hit by a car. The floodgates opened. "I'm sorry, ma'am," Nellie wailed. "I knew better! I did!" "Cut!" Her acting coach swept in to give Kelsey a big hug, everybody started laughing, and then it was off to Craft Services for cherry sours, her favorite candy.

As it turns out, the fantasy world of Hollywood is not far from real life after all. In January, the day before Hayward arrived to help with the family finances, Kelsey's dad backed his Ford F-350 truck down the driveway and accidentally ran over Bailey. When her parents explained that her suffering dog would have to be put down, Kelsey was devastated. Ever resilient, however, she maintained a brave face.

At this point in Kelsey's young life, her risks are mostly emotional. For her father, however, they are painfully physical. In the past few years, Kyle's motorcycle accidents have ripped cartilage attaching his ribs in front and back; broken a wrist, a thumb and his left ring finger; and dislocated a shoulder. At a race in Portugal in 2003, he almost died when his bike flipped over and landed on him. Local doctors said he only had broken bones, but later Kyle learned that his lung was punctured and his heart was soaking in a pool of blood. Six months later, he was back on the racetrack.

When you ask Kyle about the perils of his job, however, he says without irony or humor that it's no more dangerous than driving to work in the morning. "Honestly, I feel more scared on the freeway," he says. Hayward, who met Kyle when they were both teenage dirt-bike enthusiasts, shakes his head. "That's a typical response from an extreme athlete," he says. "That's often how they deal with risk--denial. They need to believe they have complete control over their environment." Kathy skirts the subject too. "I just wait to see if he gets up," she says in her soft, cheery voice. "If he gets up, I know he's okay."

Kyle's need for control also extends to the family money. Kathy, 38, is content to leave it all to her husband. And Kyle has little use for guys in suits--stockbrokers, insurance agents, financial planners--who are looking for a piece of his action. During the bull market, he invested in aggressive growth funds with Morgan Stanley. His account, which peaked in early 2000 at $130,000, is now worth only about $70,000. That experience reinforced his tendency to trust no one but himself with his money. "I'm kind of a control freak," he admits.

So far he's done remarkably well going it alone. His years in Japan were the most lucrative, but when at the top of his game in the U.S. (in 2002 he was ranked sixth in the nation), he earned more than $200,000 a year and managed to save enough to launch an ambitious sideline as a real estate investor. He barely broke even on the family's first investment home in nearby Antelope Valley, but he made a six-figure profit on their second one. Two years ago, Kyle spent $440,000 on their current home, an immaculate four-bedroom Mediterranean. He has since invested $160,000 in upgrades such as new floors, landscaping and a small backyard pool, and the home's market value has nearly doubled. The Lewises also have a three-bedroom vacation home in Lake Havasu, Ariz. worth about $320,000.

Kyle has two investment properties currently under construction as well, one in Lake Havasu and one close to his home in California. He hopes to sell them for a combined profit of $480,000. He also buys used boats for refurbishing and reselling: At the moment, he owns a 26-foot Back Cove Island Hopper, a 34-foot Magic Sorcerer and a 2004 Daytona Eliminator, which he accidentally flipped and destroyed in October while cruising at 75 mph (he's confident the boat's $110,000 value is fully covered by insurance).

The one area in which Kyle doesn't exert much control is Kelsey's income. She has grossed some $170,000 during her career, but more than $100,000 of that has been consumed by expenses--gas, actors union dues, head shots, hotels and lessons. Of the remainder, $33,000 sits in a bank account and another $30,000 is in so-called Coogan accounts, named after the child star Jackie Coogan, who was ruthlessly exploited by his parents. (California law now requires that 15% of a child actor's earnings be set aside in trust until he or she is 18.)

All of which means Hayward is stepping into a tricky situation. While Kyle prefers high-risk strategies, Hayward proposes a path that will give the family more security--especially if something terrible happens at the track. Kyle only decided to talk to Hayward, he says, when he realized that his racing career probably would not last more than another year or two. "When he called and said, 'Can we do a financial plan?'" Hayward recalls, "I said, 'About time!'" Here's what he suggests.

Protect Yourself

Kyle should have insurance to safeguard his family. But a $2.25 million life policy with a 10-year term--which would cost just $70 a month for a healthy 35-year-old man--is a whopping $587 for Kyle Lewis. That's far too expensive, Kyle says. Disability insurance is also too costly for his team to afford.

This puts the Lewises in an extremely precarious position. Hayward says it's crucial that Kyle move at least half of the family's assets into investments that Kathy could easily liquidate--like bonds and conservative stocks. This would also diversify a portfolio that now is too heavily dependent on real estate. "He is taking too much risk," says Hayward. "He needs to balance that out with more conservative, income-oriented investments to offset the salary that he's soon not going to have anymore."

Invest Prudently

Currently the $250,000 sitting in the family's checking account is being wasted, Hayward argues. (Kyle says he gets nervous if he has less than a quarter-million in the bank.) Hayward suggests leaving $50,000 in the bank for emergencies and putting the rest into short-term insured municipal bonds, together with some of the nearly $500,000 Kyle hopes to earn from selling his two investment properties. Hayward says he'd normally recommend a more diversified strategy, but he believes that Kyle's appetite for risk elsewhere in his financial life calls for an almost exaggeratedly safe securities portfolio. After all, it's not as if Kyle plans to retire to a rocker when he leaves racing. Among the part-time jobs under consideration: testing dirt bikes and teaching riding.

Finally, Kyle should set up a 529 plan for his daughter. He has put aside $44,000 in his Morgan Stanley account for Kelsey's tuition, but by transferring the money to a 529 he would get the benefit of tax-deferred growth until Kelsey's tuition bills came due.

Safeguard Your Assets

At the moment, Kyle has no written will and keeps most of his financial dealings in his head or on scraps of paper that Kathy would not be able to decipher if Kyle were not around--another potential disaster. First, Kyle should organize his financial information and go over everything with Kathy so she is up to speed.

Next, the Lewises should put all their assets in a living trust. If they both were to pass away, the trust would keep their assets from having to go through probate in California and Arizona, where the assets are located. In California alone, the process can take at least six months.

Kyle should also seek legal advice about registering his various businesses as either S corporations or LLCs. That would protect his personal assets in case he is sued--by the family of a customer killed in an accident involving one of his boats, for example. Incorporating would also let him sell shares and take on partners.

Kyle says he'll keep an open mind, but he's dubious about the advice. He prefers to invest in his own craftsmanship and sweat equity rather than hand money over to guys who buy blips on a computer screen. "Bryant's using textbooks," he says, "and I'm not textbook."

On the other hand, Kyle did watch Samantha and saw his daughter play a girl forced by her father's death to work in sweatshops in New York City at the turn of the last century. Nothing that horrible would happen to Kelsey, of course, but Kyle perfectly understands what's at stake when he climbs aboard his motorcycle every weekend and roars off to the cheers of the crowd.

Now that Bailey is gone, Kelsey is a bit more familiar with the concept of mortality too. But like her father--like most of us, really--she'd rather not think about it. When she played Nellie, she says, she never thought about her own father. "I really didn't think about it," she says. "I don't know why, but I just didn't."

Bottom Line

Kyle's race winnings helped fund two investment homes and three boats that he plans to refurbish and sell.

THINK YOU'RE UNINSURABLE?

How to find an affordable safety net when the usual sources turn you down

You don't have to race motorcycles like Kyle Lewis to be frozen out of affordable health or disability insurance. Maybe you have a health condition that makes you a bad risk. Maybe you run your own business, or the company you work for is too small to offer a group plan. Whatever your problem, there are insurers that will take you on. You just have to know how to find them.

If you're self-employed, consider joining the trade group for your profession or a freelancers group, where you can buy health or disability insurance at group rates. (Go to workingtoday.org or try the National Association for the Self-Employed at nase.org.) Or find yourself a business partner. Typically, all you need to qualify for a group rate is two people.

When chronic medical problems keep you or a family member from getting health insurance, contact your state's department of health services or insurance. "Many states offer health insurance coverage for people whom insurance companies have rejected," says Larry Ginsburg of the advocacy group United Policyholders. Be forewarned: There may be a waiting list.

If you work for a small company that doesn't offer disability coverage, ask your boss to look into offering it. Point out that group disability doesn't have to cost your employer anything. And while you and your fellow employees may have to absorb the full cost of a group plan, your premiums will probably be far lower than if you had purchased individual disability policies.

As a last resort, consider agreeing to the riders and options on credit cards and some mortgages that promise to pay off at least part of your balance if you die or become disabled. "Compared with regular life or disability policies, these tend to be very expensive," says Los Angeles financial planner Robert Pagliarini, "but they may be worthwhile if you have no other options."