Insurance Needs to Be a Part of Your Financial Planning from Day 1. Here’s why

Aug 30, 2018 | 3 months ago | Read Time: 4 minutes | By iKnowledge Team
Risk Management

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Insurance is an important element of any sound financial plan and yet it is also the most ignored component in financial planning. Studies have revealed that the reasons for the lack of insurance-related discussions from an early age, stems from the fact that Indian youth do not like talking about death.

Talking in excruciating detail, or even thinking, about the eventuality of your death or a calamitous disaster, hardly qualifies for the favourite pastime of most people. But failure to make space for such events to occur, cannot bode well for you or your loved ones.

But risk management should be the cornerstone of a smart and holistic financial plan. Insurance helps curb and mitigate the fallout. Think of it as a cushion that softens the blow when you land from a fall. Your savings plan should incorporate extensive discussions on how to account for unforeseen disasters and cost-effective ways to deal with those disasters.

Kinds of insurance

Different kinds of insurance plans help protect you and your loved ones against the exorbitant costs of accidents, illness, disability, and death. The insurance decisions you make based on your, family size, age, future plans and economic status, all add up to determine which form of insurance is best suited to your needs. The best financial advisors will have told you that there is no free-size insurance policy for all, or an all-in-one package gift wrapped for you.

While deliberating on your savings plan, make sure a huge part of that conversation deals with various kinds of insurance you need, and what the corresponding policies have to offer. Life and long-term-care insurance are necessities as crucial as the air your breathe, especially if you are married with children and older parents to care for. Disability and medical insurance, which gives you the means of basic sustenance when you are out of work or unable to earn, is universally of paramount importance. However, most young professionals tend to rely on the disability insurance provided by their employer, but in most cases, such office policies do not adequately cover loss of income.

With the abundance and complexity of insurance products today, young professionals who want to obtain financial coverage ahead of life-changing events find themselves easily intimidated and demoralised, according to experts. However unfortunate that may be, it is true. In fact, in some ways it is comparable to flossing; although everyone knows it’s important to dental hygiene, very few people actually do it.

Listed below are some of the must-have insurance policies depending on your requirements. For most people, a good combination of the following categories from Day 1 will keep the proverbial doctor away.

Life insurance

Life insurance is as important as your will, and a means to secure the lives of your surviving dependents after death, by making sure they have the funds necessary to help maintain their standards of living, repay debts and loans, tuition costs and hospital fees. Depending on how much you make, the current lifestyle, and inevitable costs in the future, like children headed to expensive colleges, you can set the premium and ultimate worth of your life insurance policy.

Your financial planner can help you assess the factors that determine the kind and amount of life insurance perfect for you and your family.

Disability Insurance

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Disability insurance

Having a disability insurance  in place can turn out to be a blessing in the event of an unprecedented career change or income loss, due to disability. Company-paid disability insurances can replace a portion of your lost income, during the grace extended period when you are unable to work.

If it’s not sufficient for your needs, don’t hesitate to get yourself another one from an agent. Plans like Aegon Life iTerm offer a satisfactory package. When purchased privately, however, you may have to pay a steep coverage from your own pocket. So at least make sure that you’re getting the best deal, besides non-cancelable benefits for life, or at least till age 65.

Home and auto insurance

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Home and auto insurance

When you love something, insure it. Home and car insurances should allow you to refurbish your loved assets, but also enable you to replace them in case of a catastrophe. Auto liability coverage, for example, is necessary for anyone who owns a car, and in many countries even mandatory. These insurances are available to both renters and owners and additionally help cover the costs of lawsuits if someone is injured on/by your property.

Health insurance

While most of you enjoy medical insurance as an employee benefit, very rarely do employers paying the entire premium. Depending on deductibles, coverage choices and city, privately purchased health insurance is definitely more expensive especially when you are young and healthy but have to shell out such steep premiums every month. Some plans like Aegon’s iMaximize involve only a single premium payment. In short, having one or the other is mandatory, if you don’t want to be robbed every time you are at the hospital.

Long-term care insurance

At a time when you can no longer rely on government provisions and pension schemes, the burgeoning elderly population is faced with greater uncertainty and dwindling social security. Having a good insurance policy to cover the costs of medical care, nursing homes, retirement homes, and at-home services will ease financial planning for your long-term care.

Inculcating this habit from the early stages of your career can directly translate into improvement in your investment prospects as well, as you will no longer be deterred from risky but profitable ventures. To that end, Aegon Life has a unique investment cum insurance plan for you, called Future Protect. Making insurance your priority will ensure and serve to strengthen your confidence as the future gets more uncertain along the way.

Advt. no.: II/Jul 2018/4239


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