Insurance Planning

Insurance is often thought of as an optional extra in the area of personal and business finance – a “nice to have” which can offer protection if things go wrong but certainly not as an important asset in its own right. However, it’s true to say that clever insurance planning is a strategy that can protect the vital asset of your ability to earn an income – perhaps the most important asset that you have.

Of course, with so many different types of insurance policies out there, the key challenge lies in working out exactly what type of insurance can add the best value to your portfolio and offer you the most benefit.

If you are serious about ensuring robust protection for your finances and your family, here are the two main areas of insurance that you should consider:

Life insurance

Term insurance offers temporary protection of around 10 to 30 years, usually with an option to renew your policy at the term-end. A feature of most term plans is the option to convert (change) the plan to a permanent plan, with no medical evidence. Typically, term insurance addresses temporary needs such as a mortgage but is not practical for long-term needs such as Estate Planning.

On the other hand, permanent insurance lasts for a lifetime and provides a death benefit to your beneficiaries, no matter when you pass away. Most people have a need for some permanent insurance.

Living benefits

This term covers a range of insurance policies, as follows:

Disability insurance offers income protection against injury or illness, ensuring your paycheque continues when you are unable to work and earn an income.  This is one of the most overlooked areas of planning.

Critical illness insurance covers many common illnesses such as cancer, heart attack and strokes and offers lump sum payments upon diagnosis.

Although many individuals receive some form of living benefit from their employer, it is recommended that they enhance this policy to ensure that they benefit from an appropriate level of coverage which suits their income and financial needs.

Understanding your insurance values

It could be said that your personal values dictate the type of insurance that you take out, reflecting what is important to you in your professional and personal lives and how you best want to protect such assets. The key to clever insurance planning is making sure that your insurance portfolio perfectly matches your life’s priorities and financial objectives.