insurance-is-integral-to-financial-planning Insurance Is Integral to Financial Planning

A financial plan usually starts off with your dreams and aspirations, and rightly so. After all, a financial plan is there to help you:

• Become financially independent
• One day retire comfortably
• Fulfil dreams like travelling plans
• Equip children you may have for the future, with the best possible education

Cool, but where does insurance come into this?

While you need savings and investments to make these dreams a reality, you could put all of these savings and investments at risk if you don’t have adequate cover should something go wrong. That’s why insurance should always be a part of your financial planning explains Petrie Marx, Product Actuary at Sanlam Individual Life.

For example, your retirement plan ensures that you have enough money to live on after you’ve stopped working. But what if something unexpected happens before you reach retirement – like you’re in an accident that leaves you disabled – and you can no longer work or keep saving towards your retirement plan?

Including insurance cover as part of your financial planning helps to protect all of the hard work you’re doing in terms of saving and investing, so that this money is protected even if life throws an unexpected challenge your way.

Or consider your children’s education provision. Your financial planner will help you understand how much you should put away to be able to one day afford those education plans. But, at the same time, you should protect those same amounts with sufficient death and disability cover to ensure that your children’s futures are protected, regardless of what may happen to you as breadwinner.

How do I understand the types of insurance to include in my planning?

We usually analyse our risk cover needs by asking ourselves the following questions:

1. Who will take care of my dependants if I am unable to do so?
2. Are there any debts I want to settle should I pass away or become disabled and unable to work (for example, paying off my house)?
3. Should I provide for estate duties when I pass away, so that my dependants don’t have to cover this cost after I’m gone?

We take out short-term insurance on our homes, cars and other valuable possessions, but our biggest asset is our ability to continue to earn an income, to afford our lifestyle, and to provide for tomorrow. Sufficient life insurance is the only way you can protect this most valuable asset of all.

Please consult with a financial planner before you take any action regarding your policies. Sanlam is a Licensed Financial Services Provider.