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 which 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 most 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 three main areas of insurance that you should consider:
Life insurance
Term insurance offers coverage for a specific period of time such as 10, 20 or 30 years. The purpose of term insurance is to protect against premature death and to make sure your dependents and debts are taken care of. At the end of the term, there is usually an option to renew or convert your policy.
Permanent insurance provides you coverage for a lifetime. With a permanent policy, the premium generally stays the same and an option to accumulate cash value.
Living benefits
This term covers a range of insurance policies, as follows:
- Disability insurance offers income protection against injury or illness which means that the policyholder cannot work and earn an income.
- Critical illness insurance covers many common illnesses such as cancer and strokes and offers lump sum payments upon diagnosis.
- Long term care insurance is often used in later life to insure against the possible need of becoming dependent upon others for your care and can pay for care facilities or care providers.
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 cover 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 smart insurance planning is making sure that your insurance portfolio perfectly matches your financial and life priorities and objectives.
Talk to us, we can help with what makes the most sense for your situation.