What homework you need to do?

When we choose insurance, we want it to be cost-effective, and we should select the coverage that helps to protect our family in long term financial interests.

Determining which insurance coverage would be most beneficial to you requires:

1) knowledge of your needs
2)An appreciation for uncertainty
3)An inderstanding of the best product alternatives, and
4)Complete objectivity in the decision-making process.

These are very important when you considering buying insurance, if you don't do your homework, finding the right insurance won't be difficult.

How do you know you have enough?

How do a person know he or she have enough coverage?

Let assume a person earning a avearge og $50,000 per annum. In 10 years time, he will be earning half a million $500,000.

Essentially, he is protecting only 10 years of future income that would otherwise vanish if premature death occurs...

Think of long term..

What underwriter will look at on your insurance proposal?

When an underwriter looks at your insurance proposal, they will look into several factos:

1) your health problem..
my experience tells me that by the time you reach 45, or now may even earilier some health symptoms may apprear and will hinder your insurance application.

For example, commom health problems such as hypertension.diabetes and high cholesterol levels may cause the insurer to request a higher premium.

For some one who may think he is healthy now, he may not know what will happen to him if he wait for another year..

2) your age
As we grow older, insurance premium will maturally become very expensive. Based on the calculation, a premium will cost $3,000 at age 47 now, if wait until age 50, it will be 45% higher. This is why it is inportant to increase your coverage when you are younger.

Rather take the premium for something else

Some of my friend would say that they would rather spend the insurance premium into something else.

I will have a different point of view..

For eg. if $3,000 is invested every year for 15 years, at tn annual growth rate of 7%,, i could accumulated approxiamately $75,000.

By paying $3,000 a year in surance premium, should premature death occur in those 15 years, my family will be better off, with the guarantee death benefit frim the insurance. So there is a trade-off between putting off insurance than investing in something else.

But let it be very clear about the role of insurance in personal financial planning.

Insurance serves purely as a protection tools.

Insurance in a time of uncertainty

I read a article on the Sunday Times (Page 33) on Nov 8, 2009 and would like to share this to whom who cares about their family.

A person at the age of 47 pump in a $1m coverage after review his financial plan.
He realize that in today's environment is highly unpredictable as compared to that 10 years ago. he have 2 teenage girls which are still in school and both will go into tertiaty education in the few years time. Eventhought, he have educationa plan for them, a catastrophic event or another financial crisis could drain my assets ans destroy the best of my invesment plan.

Hence, he decide to pump in $1m of Term coverage on top of his another $1m whole life policy. His annual premium amount to $10,000 per year cover $2m coverage.

By paying the premium, he get to enjoy the coverage as it will step in to meet its obligations should anything untoward happen to him. Most importantly, he know that all the family's financial needs are well taken care of.

Of course, everyone have his/her own budget.. Get yourself cover step by step.. if you care for your family...