TOTAL PROTECTION/INSURANCE - AT THE HEART OF YOUR WEALTH PLANNING

TOTAL PROTECTION/INSURANCE - AT THE HEART OF YOUR WEALTH PLANNING

    Life has become uncertain in the current environment. The past few years have made us see the uncertainty surrounding our life and health, in addition to many other challenges. This would have come as a surprise for many but now this is the well-accepted reality of life. Our financial planning is incomplete unless we provide protection against these uncertainties of life.

Today, insurance has become a critical element of your financial planning. Generally, there are three critical elements at the heart of any financial planning -

• Wealth Creation - Investment & portfolio planning for financial well-being and meeting life goals.
• Wealth Transfer - Management and transfer of wealth to the next generation.
• Wealth Protection - Ensuring your wealth does not erode due to any uncertainty, through insurance.

First of all let's understand what is insurance?

    Simply put, insurance is an arrangement by which an insurance company undertakes to provide a guarantee of compensation for a covered risk /loss in return for a premium. The basic purpose of insurance would be not to profit but to ensure that you are financially compensated for any loss, damage or uncertain event. The idea is to protect your financial well-being and your life savings.

The four main risks in life which could be a real possibility for any one of us, are stated below as the "4 Ds".

• Death
• Disease
• Disability
• Disaster

In this, article, we will look at how we can protect ourselves against all these 4 Ds through a combination of insurance products.

A] LIFE INSURANCE:-

    Life insurance should be seen as an investment for the future of your family as it protects your family against any financial crisis in case of an unfortunate event. The idea is that your family's future is not compromised and all of their needs are taken care of. In the absence of adequate life insurance cover, the entire future of your dear ones is at risk. While the importance of life insurance is known to everyone, unfortunately, the average life insurance coverage for Indians is very low. The life insurance cover must be adequate for covering the following:

• All outstanding liabilities & future loan repayments
• Life goals for children like education and marriage
• Household expenses for foreseeable future
• Family health care & insurance premium needs
• Emergency funds

A life insurance policy offers coverage against natural or accidental death. You may/should additionally opt for critical illness or accidental disability through riders. There are also policies that cover a child's future.

B] HEALTH INSURANCE:-

    Health issues, illness and hospitalisation can hit any person at any time. Health insurance is equal to wealth insurance. Health issues are an undeniable, unavoidable event which is very likely to happen once every few years in every family, either with self, children or parents. It becomes very important to have adequate health insurance covering all family members in the family. Another important fact is that medical inflation is much higher than regular inflation and is in double digits.

There are a lot of choices available with health insurance like individual plans, family floater plans, senior citizen plans, critical illness plans, disease-specific plans, group insurance plans, etc which can be bought as per your need. The scope for comprehensive coverage under health insurance policies would be

• Hospitalisation expenses
• Pre- & post-hospitalisation expenses
• Day care treatments
• Expenses like ambulance, ICU, cost of medicines, tests, etc.

C] PERSONAL ACCIDENT INSURANCE:-

    Personal accident insurance is another critical element of financial protection for your loved ones. This specifically covers risks related to any mishap originating due to an accident. A personal accident policy is also very affordable and one should ideally take as higher an amount as possible. A personal accident policy specifically covers risks related to accidents resulting in-

• Accidental death
• Accidental hospitalisation expenses
• Permanent total disability
• Temporary total disability
• Temporary disability with loss of income

D] CRITICAL ILLNESS:-

    Given today's lifestyle and habits, there are many critical illnesses that have become very common and affecting people even at a very young age. Estimates show that one in every four men and one in every five women are affected by critical illness before they reach the age of retirement. Illnesses like strokes, cancer, kidney failures, heart valve surgery, coma, etc can drain you mentally, physically and even financially. A single illness /disease can potentially ruin your entire life savings. Often, your regular health insurance plans prove to be inadequate, given the high costs of treatment of such illnesses. A critical illness cover can save the day at a very low, affordable cost.

E] HOME INSURANCE:-

    A happy home is a dream of many. Your home is your most precious asset( in realty so called asset 😕). Unfortunately, rarely do we think of protecting the same, along with the prized possessions, and contents therein. We can easily do this with the help of a comprehensive householders package policy which comes at a surprisingly affordable cost. There are risks faced like burglary, fire, riots, natural calamities, smoke, etc. which can potentially destroy your life's savings. Such a comprehensive policy will offer coverage against a covered loss /risk for

• Dwelling /building structure like walls, ceilings, flooring, etc
• Personal property coverage, covering furniture, electronics, clothing, etc
• Liability coverage for guests for any injury or damage to property, if found liable
• Other structures not attached to your home like a shed, garage, fence /boundary walls, etc.

F] TOTAL COMPLETE INSURNACE APPROACH :-

    Ideally one should aim for 'Total' or Complete protection' of your family's financial future and not leave anything to chance. Such complete protection will mean having a life, health, personal accident, critical illness and home insurance policies with "adequate" coverage. If you are having car or motor insurance that may be added to the list but perhaps you would already have the same since it is mandated by law. A comprehensive basket covering all these risks may seem to be a little too much to some but it is something which is very practical and necessary. 

You may talk with us at FINMISSION LLP -Point of Service Insurance Provider to know how you may protect yourself from all the 4Ds with the right selection of suitable policies as per your needs. So let's start planning for 'Total' or Complete protection'  for peace against the fears & uncertainties of life.

😊Hope you enjoyed or appreciated reading this one. Thank You, keep safe & Be Empowered... 😊
This blog “Finmission’s Class" is an effort to educate and spread the word of financial knowledge and awareness whilst empowering the community with a touch of practicality on personal finance.
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