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| Wealth Protection & Insurance |
"Why and how much I should insure myself?" The answer to that question lies in the intrinsic value that resides within each person who is capable of generating wealth through work. For example, if a person's average income per year is US$100,000 and he/she can work to earn this income for the next 20 years, his/her total future income will be US$2 million. This amount is defined as his/her ability to generate wealth over the next two decades.
The ability to work and generate wealth is the most important financial asset that any person has. But it can be adversely affected by three types of Personal Risks that can have adverse effects on a person's ability to earn an income should any one or more of them occur. These three Personal Risks are:
- Major medical illness
- Total and permanent disability
- Premature death
Few if any individuals can realistically avoid the above risks. This is where insurance can play a valuable role. It is possible and indeed rational to transfer any or all of these risks third parties who are able to assume these risks on your behalf by way of different insurance plans. |
Types of Insurance
Now that we have a basic appreciation of the rationale for insurance, the next step is to develop an understanding of the different types of insurance plans available and how they work. There are three main types of insurance:
- Health Insurance
- Life Insurance
- Retirement Plan
Each of these types of insurance has sub-classes of insurance products which are designed to cater to the more specific needs of an individual.
How much coverage?
Your amount of coverage for health insurance is a much more subjective matter. It will depend mainly on the class of hospital ward you opt for as well as the range and severity of illnesses that are covered. Naturally, choosing a plan with a more extensive coverage of diseases and better class of hospital ward will increase the premium payments for your health insurance.
The same applies for a retirement plan; the initial lump sum or regular premiums payable will be higher if you choose a plan which pays out a higher monthly income. This is essentially dictated by lifestyle choices
which financial planning can help you answer in a holistic way. |
To get know investment tips, you can also visit the SFC's InvestEd website.
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