Importance Of Insurance In Family Financial Planning – What & Why Should I Buy?

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In the wake of increasing inflation and changing lifestyles, it is imperative for every individual and family to focus on financial planning as soon as possible.

A financial plan should be uniquely tailored to meet your family’s needs at different stages of their life. When building your family financial plan, it is important to consider a variety of financial instruments to address the different needs and goals.

It has been observed that many Singaporeans tend to focus on the wealth accumulation’ aspect of financial planning while the ‘protection’ element is often compromised or neglected.

Insurance is a very important financial product. It offers us a protective financial cover against the various contingencies in life.

For the many uncertainties that life throws our way, there are different types of insurance that we can bank on. Life insurance and health insurance are essentials when we are starting our own families. They are the must-haves in any family financial plan.

Why We Need Life Insurance In Our Family Financial Plan

The best Life insurance plans offer the policyholder’s family adequate coverage in the event of the death or disability of the policyholder. Among many other reasons, this makes Life insurance a must-have. Let’s dive deeper into these reasons.

1) It offers financial security for the survivors

With Life Insurance, we can secure our family’s future and ensure there’s a source of replacement income in the event of our unfortunate demise or disability. With the death or disability benefits derived from Life Insurance, our family can meet any significant expenses we may have left behind, like debt repayments. It will also help our family remain on track to achieve their own life goals.

2) It helps with our retirement planning

By purchasing the best Life insurance plan to meet our long-term goals, we can even enjoy the benefits of retirement planning. In plans like endowment policies, we get to enjoy maturity benefits that can serve as a source of retirement income to start our retirement.

3) It secures our child’s future

Life insurance helps secure our child’s future. If we time our policies right, we can meet the expenses required to get our child into a good university with the benefits obtained from our Life insurance plan. Endowment policies can help us grow our money adequately so that we can give our child the best education possible.

Why We Need Health Insurance In Our Family Financial Plan

Health insurance is definitely one of the most important covers to purchase for a family. Let’s take a look at why health insurance needs to form a part of our portfolio.

1) Health insurance covers medical costs

Medical expenses can become overwhelming for many of us very quickly, especially given the rising costs of healthcare in Singapore. With a health insurance plan, we can meet these expenses without any significant financial stress. Medical insurance policies generally cover various costs like hospitalisation expenses, surgical procedures etc.

2) Health insurance also offers coverage for critical illnesses

Critical illnesses like cancer, chronic diseases, etc can affect anybody any time. The costs associated with treating these conditions can be extremely expensive and will be a huge financial burden for any family. Fortunately, with a good health insurance plan, we can rest assured that these medical expenses will be covered, at least to a certain extent.

3) It gives us additional benefits over and above our employer cover

If we’re a salaried employee, our employer probably has a Group Health Insurance plan in place. While this is indeed a good financial product to have in our portfolio, it may not be sufficient. Personal health insurance can offer us additional protective coverage, over and above what our employer may offer. It also gives us a more customised cover that’s tailor-made for our specific needs.

4) Health insurance can provide financial support for long term care

Severe disability can happen to anyone, be it due to an accident, critical illnesses or even advanced dementia. Thus, it is important to have sufficient Long Term Care insurance coverage to ensure that the costs associated with private nursing care or caregiving services can be managed. The on-going expenses can add to your family financial burden if there is insufficient coverage.

5) Health insurance take cares of minor medical expenses due to accidents

Sometimes, we may end up paying for minor medical expenses due to accidents, such as sprained ankles due to falls etc. These small bills can be taken care of by our personal accident plans which are inexpensive as a family package. Specific infectious diseases, (e.g. dengue fever, Hand Foot Mouth disease) and food poisoning can also be claimed under such coverage.

Conclusion

Insurance is an important part of any sound family financial planning. Being prepared for any unforeseen situations will ensure that we can still reach our goals after facing a financial crisis.

An insurance plan will prevent us from using up our emergency fund. Insurance can also protect our loved ones if we’re injured in an accident, become sick, disabled or die.

We need to identify the most suitable insurance plan for our requirements and include them in our family financial plan. The right insurance policies can mitigate many of life’s risks. This way, we can rest assured that our financial future as well as the future of our family are secure.

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MoneyGrowth

MoneyGrowth

Sharing news, tips and insights on how to grow your wealth in Singapore.
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