Insurance Planning – Part 1
When you prepare your financial plan, insurance is a very vital of it. It
is a very effective risk management tool for any living human being. By
effective insurance planning, client always achieve a lot of peace of mind.
Why Insurance planning ?
Any individual who earn money and doing well in their career and fulfill
all financial goal in their life and at a certain age get retirement. If this
assumption would be same for each individual across the world then we need not
life insurance. Unfortunately every human being have a certain type of life
risk during their entire life. These risks may be premature death, permanent or
temporary disability due to accident or poor health. These mentioned risks
affect your future earning or may be totally stop the future earning. It also
affects badly on your personal and financial life.
Life insurance cover your life’s uncertainties and helps your surviving
family members in case of any unfortunate event. It provide a certain amount of
money to the nominee for the survival of your family member. So now it is clear
that it is very vital and important financial product and every earning individual
must consider it.
How to determine the sum assured?
In our country, most of insured person are under insured. It means they
have not covered by sufficient amount. That amount is known as sum assured. To
determine the sum assured there are many methods. Few are given below:
1) Human Life Value
2) Multiple of Earning
3) Appropriate size premium
4) Need based Approach
If you feel difficulties to determine the appropriate sum assured then
you can take services of an expert financial planner. You can also adopt a
simple approach like sum insured should be equal to 5 times of your annual
income. The most famous methods across the life insurance industry are human
life value and need based approach.
If you want more information
regarding investment and insurance related or you have any other query about investment
feel free to ask us.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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