Risk Management and Insurance Planning

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With life insurance planning, the first question is always, "How much is enough?" Whether you need life insurance at all and, if you do, the best amount of insurance coverage needed dependson your particular circumstances. Many people start thinking about life insurance when they marry and have children. But, even if you aren't married, you may have someone else, such as a parent or sibling, who depends on you for financial support. The longer your dependents need support the greater your need for coverage.

If you discover you need additional coverage and you are still relatively young, term life insurance is generally the least expensive way to go because it provides "pure coverage"; you build no cash value in the policy. (Note that the cost of term insurance goes up as you grow older.) Term insurance provides protection for a specific number of years, with the death benefit paid to your beneficiaries if you die during the policy's term. When the term ends, so does your coverage, unless you renew the policy.

On the other hand, whole life policies and investment-linked life insurance provide protection over your entire life. For younger people, whole life insurance is more expensive than term. But the premiums generally are fixed, so as the years go by, it can become less expensive. Cash values and interest accumulate in these policies are tax-deferred, and you can borrow from the cash value.


Disability Protection and Personal Accident Insurance

Like life insurance planning, disability insurance planning is based on your particular needs, circumstances, and resources. In addition, you may want to include long-term care insurance in your financial plan to help preserve your assets for your family in the event you suffer a prolonged illness. Don't forget about personal accident (PA) insurance too.


Health Insurance and Medical Card

Also consider healthcare provisions for medical treatment. A medical card can help protect you against the costly medical expenses and ensures comprehensive coverage in medical, surgical and hospital costs, ambulance fees and other related medical charges.