Financial Planning

Simple guidelines for a brighter financial future

The basic foundation of any financial plan is adequate insurance cover for unexpected contingencies like premature death, permanent disability and critical illnesses.

Insurance is the first pillar of any financial plan. Once we take care of this pillar, we can move to other areas with more peace of mind.

How much insurance should I have? What is a suitable amount of insurance cover? What type of insurance is most suitable for my family?

Here are some basic guidelines used by financial planners worldwide.

1. Insurance Needs
   
   For most of us, insurance can get quite complex. Whole life, endowment, term, investment-linked?
   
   More importantly, you should discuss with your insurance adviser.
   
   All insurance advisers are now required to do a Financial Needs Analysis for their customers.
   
   This is to ensure that the insurance plans they recommend are suitable for your needs.
   
   For most people, the protection needs fall into these major areas
   • Protection for loss of income
   • Protection for critical illnesses
   • Protection for major medical bills
   • Protection for housing and other big loans
   • Protection for assets like car and house
     
     
2. Tailored to fit your budget
   
   It is very important to ensure that you are comfortable with the budget for your insurance plans.
   
   For most people, a general guideline is that about 10-20% of their income should be allocated to insurance for the protection needs discussed above.
   
   It is good to choose an insurer that has a wide range of plans and options.
   
   Equally, it is important to be comfortable with your insurance adviser to tailor solutions that fit your budget.