We just had the quadrathlon of our Series- Wealth Creation- The Do- It – Yourself Way… The four stages that we crossed were:
Part 1: Net worth, Assets & Liabilities, Personal Balance Sheet Format
Part 2: Developing a Monthly & Yearly Budget with Format
Part 3: How to Invest, Formulate Goals, and Choose Assets
Part 4: Debt Reduction Techniques, Credit Cards & Debt Management Rules
Here is the Last and Finale of this Series– Wealth Protection
After working hard to create personal wealth, you need to protect it. People acquire insurance to protect themselves from major financial loss. Insurance is simply a promise of Reimbursement for a loss in return for a premium paid. When shopping for insurance products, consumers should match their needs with what the product offers and seek out the best deal. You can buy insurance to cover all kinds of risks, but basic needs can be met with the property, health and life insurance.
PROPERTY INSURANCE
Auto Insurance
State law requires that all motor vehicles have liability insurance to cover injury to other people or damage to their property. If you have a loan on your vehicle, your lender will also require physical damage coverage on it. The best thing is to cover the vehicle with a Comprehensive Cover.
Home Insurance
Home insurance covers your home and possessions. The personal liability coverage in a home policy protects you from loss resulting from any injuries that may occur on your property. Your mortgage lender will require you to carry a certain amount of insurance coverage as long as the mortgage is in place. Standard home coverage insures your home and its contents against loss from such risks as fire and theft. You may require special insurance for flood, earthquake or other risks specific to your area.
HEALTH INSURANCE
Medical Insurance
Medical insurance pays for some, but not all, of your doctor, hospital, procedural and prescription drug costs. Many people have significant levels of debt because they didn’t have medical insurance or they didn’t have savings to pay the expenses that weren’t covered by their health plan.
Premiums are lower on employer-provided health insurance because the risk is spread over a larger group of people. Take advantage of the lower costs that employer-sponsored health plans offer, but expect to pay part of the premium out of your paycheck. In addition to medical insurance, many employers offer dental and vision plans, often at low cost.
Disability Insurance
Statistics show that you have a higher risk of becoming disabled than of dying before age 65. Disability insurance helps you pay living expenses if you are sick or injured and unable to work for a long time. Your employer may offer this insurance in its benefits plan. If you are self-employed buy it and maintain it till your retirement.
LIFE INSURANCE
The need for life insurance depends on a person’s circumstances. In the event of your death, life insurance pays money to the person you choose (your beneficiary). Life insurance helps give financial protection to your children, spouse, parents or even your business.
While some types of life insurance offer savings and investment components to keep the future cost of premiums lower or to increase the death benefit, they are not a substitute for a savings or investment plan. Low-cost term insurance, often available through online portals or through agents, can offer protection for young families.
Buy only Term-Insurance for your insurance needs. The market is full of ULIPs (Unit-linked Insurance Plans), Whole-life, Money-Back and other policies which make returns less than inflation and have huge costs. Refrain from these and invest on low-cost term plans availing high coverage.
Personal accident insurance may also offer a cushion to families if a member dies or is seriously injured in an accident. This kind of insurance is often available through your employer or another provider at relatively low cost.
Tips for Protecting Your Wealth
There are many types of property, health and life insurance, so do your research and seek good advice.
- Take advantage of group insurance through your employer or other associations you may have.
- Study the needs of your family and decide how much you can afford to pay.
- Shop around and get at least two quotes. The website can help a lot.
- Ask about other discounts that may be available (for a good healthy record, safety equipment, multiple policies with the same provider, etc.) to reduce your cost of coverage.
- Review your insurance coverage annually to make sure you have appropriate coverage as your situation changes.
- Like all investments, be sure to get all the facts before parting with your hard-earned money.
With this, the series end but I hope it will be a new beginning for the readers. We often lack basic things and hence the entire financial life becomes stressful and messy. But learning and applying few easy but important things can make the financial life strong and happier. Share you mind below- What do you think of this article and series?
