Comprehensive personal financial planning encompasses everything from wealth protection using life insurance policies, growing your wealth with equities and properties, to wills and trusts for estate planning. Though life insurance is a vital element of financial planning, there are however, several misconceptions about it. Many people view it as an unnecessary burden on their financial resources. In the past, it was even viewed with distaste because of its association with death, accidents and other misfortunes. Fortunately attitudes are changing as the public becomes more educated with the usefulness of insurance policies as risk management tools.
Why Would I Need Life Insurance?
For most people, the main aim of financial planning is to accumulate sufficient wealth to gain financial freedom. The greater part of your life is likely spent in pursuit of this goal with savings and investments forming the core of your financial plan. However, without an adequate insurance coverage, there is no guarantee that you will accumulate the wealth you have set out to achieve or be able to retire with sufficient funds to last your golden years. The reasons being:
1) Should misfortunes befall eg an accident that causes one to be disabled, your ability to earn an income may be reduced or completely lost. This will inevitably affect your resources to invest and save for wealth accumulation. If you have financial dependents at this point in time, eg parents and/or children to support, you know that the situation will be very grim.
2) According to studies, every 1 in 5 persons in Singapore is likely to contract some form of critical illness by age65. If one is down with cancer, the top killer in Singapore, and you do not have any health or life insurance, the hard earned money you have spent years to accumulate will simply go to hospitals for your treatment. The longer the treatment, especially for chronic diseases like chemotherapy for cancer, diabetes, kidney dialysis etc, the more your retirement nest will be depleted, leaving you helpless in your retirement years.
3) And if you do not have enough money for medical treatment, guess whose retirement funds will be used then? Likely the funds will come from your loved ones. Now your dire state does not simply just affect you, your family will be implicated as well. Who would ever want a situation like that?
This is exactly where an insurance policy comes in to “transfer” these financial risks to the insurance companies so that you will be able to survive the increased financial burdens in times of unforeseen circumstances. For a small portion of your monthly income, a peace of mind can be achieved. This is why life insurance is often referred to as “wealth protection” or “family protection” because it is exactly what it does!
Insure yourself, protect others.
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The author of this article, Mr Sean Ong is a Certified Life Coach, a Master Practitioner in Neuro-Linguistic Programming and a Chartered Financial Consultant who has been featured on the local TV and radio. Having begun his career in the finance industry since year 2002, he is currently leading a top-performing advisory group as a Senior Advisory Group Partner in IPPFA. In his efforts to contribute to the society, Sean ran 1,000 km over 87 days to successfully raise more than $13,000 for a children charity in year 2012. He also published a book subsequently where sales proceeds were donated to charity. Sean completed his Masters of Science Degree in Technopreneurship & Innovation in year 2020 and was honoured in the Director’s List for academic excellence. He has keen interests in InsurTech projects and mental wellness initiatives for the youths. Above all, Sean counts knowing Jesus Christ as the most significant event of his life. He can be contacted at firstname.lastname@example.org.