DO YOU HAVE AN EFFECTIVE INSURANCE PORTFOLIO?

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Just like your investment portfolio, it is important to understand whether your existing insurance policies are up to date and are in line with your ever changing protection needs.



When planning for an insurance portfolio, you may first choose an advisor that will help you understand and assess your protection needs, if you cannot do it on your own.

The amount of protection recommended and what product to choose depends on your goals and financial situation. A trusted advisor can help you with financial needs analysis that includes your goals, needs, and your capability to keep a life insurance policy.



We cannot place a price tag to a person's life but calculating a person's economic value or the expected future income that he/she can contribute to the economy and household should be considered. 

Having a comprehensive financial needs analysis and goals-based planning will make insurance planning a successful one for you.

Remember that having a protection plan is about you and your goals, not the goals of the advisor. Although financial advisors can guide you, they won't be able to make the best recommendations if you will not be totally honest with your goals and financial situation.



Analyzing your insurance needs:

 It is important to do a Static and Dynamic analysis when planning for your insurance.
 Static analysis calculates the estimate immediate expenses that must be funded when a person dies. These are normally the funeral, hospitalization, liabilities, and miscellaneous expenses associated with death.

 And since your goals and life circumstances continuously change, it is important for us to consider future needs of our family that will be left behind.

dynamic analysis is based on how our financial goals and needs are expected to change. Your existing policies may not be in line with your current situation and for this reason, a regular review of your insurance needs is crucial. 

If you have young children, then you may need to have a substantial amount of coverage since you also have to consider education expenses that need to be funded even if you are no longer around. However, when your kids start finishing school, then the recommended coverage for you may decrease.

Aside from life coverage, disability and critical illness coverage should also be considered.



Still confused on what type of coverage to get? Check this Protection Considerations for different life stages.


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Single and Just Started Building a Career

This is the stage of our life when there's no people financially depending on us yet. Most people in this life stage do not need a high amount of life coverage, hence, they do not consider having a life insurance plan. What usually happens is that young single professionals just spend money on things such as gadgets, going out with friends, travel, and other leisure activities.

But should you really not consider getting an insurance plan when you are single? Well, there are exceptions. If you have parents who depend on you, a charity, other relatives, or if you have liabilities and other possible expenses associated with death that you don't want to pass on to your family, then you should consider getting a life insurance plan.

Some important considerations when it comes to having an insurance plan are the living benefits that it can provide such as Disability coverage, Accident, and Hospitalization. You may not have people depending on you but who can you depend on when these risks happen to us? Do you really want to pass the financial burden to your family?

Building a Family / Young Families / Established Families

At this stage of your life, the level of responsibilities dramatically shoots up. You are no longer just living for yourself but also for the people who depend on you. There are more mouths to feed as well as other expenses such as education and cost of keeping a home. At this point, having a life insurance plan is essential and a mortgage redemption insurance. This is to ensure that you will still be able to provide for your family and for them to still keep the home should the unexpected happen. Definitely, disability coverage should be considered. Can you imagine a breadwinner who can no longer provide for the family and at the same time an added burden to the household because of disability? You may also want consider having a healthcare plan for the entire family to ensure that there's an available fund for hospitalization needs.

To have an estimate of how much protection should we have, please visit this link if you haven't done it before. Life Coverage Analysis

Leaving a Legacy

The primary role of insurance is to provide protection to replace income in case of life's uncertainties. But other important role of insurance to our financial life is wealth preservation. In this stage of our life, we no longer consider an insurance plan as income protection but to protect what we have accumulated during our income generating years. We are now in the stage of creating a plan of transferring assets for the enjoyment of the next generation. Life insurance is one of the essential tools that we can use in Estate Planning. It can provide immediate funds necessary to cover estate taxes in order for our assets to be transferred to our heirs.


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