A financial plan can seem like an overwhelming. Especially if you don’t have the right information and tools to help you out. Part of everyone’s financial planning should be to have a backup plan in place. A backup plan is meant to protect your income and assets in the event the unexpected happens like job loss, an illness or an injury. Here are nine tips to get your financial backup plan in order.
Ensure that there is enough life insurance in place. If the unexpected happens to the breadwinner of the family, it’s important to have enough life insurance cover in place so that the spouse and family can continue supporting themselves financially.
Consider trauma cover as part of your backup plan. Trauma cover pays out in the event that certain medical conditions occur. For example, heart attacks, strokes or cancer are considered trauma. This insurance bridges the gap between income protection insurance and life insurance.
Becoming permanently disabled can actually be more financially debilitating than death. If you’re permanently disabled, you may lose your ability to bring in income for the rest of your life, plus, there will more than likely be high costs for health cover and other various help needed. You can add permanent disablement cover on your life insurance plan.
Don’t leave it all up to your super – those who have life insurance through their supers believe that they are fully protected in the event that something happens. However, there are often restrictions on coverage, and any payouts might not be enough to cover expenses. Getting a separate life policy can help you bridge this gap.
Many people think about the breadwinner when it comes to insurance cover. But what if something happened to the non breadwinner and there are children to take care of? The breadwinner would have to continue working, but you could have a backup plan by having a lump sum policy in place.
Pick quality over cost – not all life insurance plans are the same when it comes to death benefits, trauma cover and income protection. A good financial planner can help you pick a policy that meets the specific needs of your family.
Don’t forget about insuring your children. No one likes to think about a child having a premature death, but if it were to happen, there can be significant expenses. When insuring a child, you can choose a policy that turns into their own policy once they become an adult.
You are your own greatest asset. If you take the number of years you plan on continuing to work before you retire and you multiply that by your income, you can easily see how much money would be lost in the event you were no longer able to work. It’s for this reason that income protection is a necessity in your financial backup plan.
Review your life insurance cover often to ensure it meets your current and future needs. Life changes and events happen, which means that your current cover may no longer meet your needs. At the very least do an annual review, and you can always talk to a certified financial planner to make sure that you have enough cover and the right cover.
Make sure you’re not paying too much for your life insurance cover. If you are paying too much, it’s money lost that you could be saving, or putting into your retirement planning. Talk to a financial planner so that you can get the best quality of cover while also ensuring you’re not paying too much.