Moneycontrol
Aug 08, 2017 04:02 PM IST IST | Source: Moneycontrol.com

Insure yourself to ensure your financial freedom

Insurance is the small price one pays for his peace of mind. With right insurance in place, even a ‘small guy‘ can take risks and achieve financial freedom.


Naval Goel

Policyx.com

In today’s world how you manage your money can prove to be the difference between your success and failure. We spend our everyday life in planning so many aspects of it, yet many of us fail to have a proper long-term financial plan for achieving financial freedom. One of the most important aspects of having peace of mind and a sound financial plan is to have good insurance. Many working people think the insurance provided by their employer is quite good enough and do not bother to look further. This is a huge mistake as such insurance plans often don’t cover all necessary aspects and might not provide the necessary financial cover when required.

Today let’s take a look at how important a role insurance plays in your journey to financial freedom.

Cover for bad times

Life is uncertain. One day it can be all going your way and the next minute you might suddenly be in deep trouble. Insurance makes sailing on the rough waves on the sea of life a bit smoother and safer. Hospitalization costs can eat away a huge chunk of your savings and leave your financial plans in ruins. A proper integrated shield plan from an insurer makes sure that in the event of death, permanent disability or critical illness your family’s life does not stop.

One way to make sure that your insurance plan provides enough financial cover is to make sure you have enough life insurance to cover ten times your income if you have children less than 10 years of age and five times if you have children above that age. Also one must make sure it provides enough protection to pay off debts like loans and mortgages.

Business and domestic stability

It is a must for any business owner to have proper insurance or the business might not be successful. Liability insurance and property insurance are two must-haves that safeguard you in the case your company damages a third party or your company is a victim of some horrific accident. It is important to get data breach insurance if your firm deals with sensitive information and Workers Compensation insurance should your employees get injured on the job. You can save money by buying a Business Owner’s Policy (BOP) which would usually have all the insurances a typical business owner needs.

Although insurance is largely personal, it is important to have your loved ones insured to ensure long-term domestic stability. A proper policy would help pay off debts and make sure your family has a roof over their head if something happens to you. Often overlooked, it is important one gets Disability insurance because one of your most important assets is your ability to work and earn.

Long-term financial security

Once you have regularly paid your premiums over the years, you have long-term financial security because you can access those funds in various ways. Not only can you cash in the policy for a guaranteed income, you can access some of the monetary value and continue to protect your family for decades. The ability to fall back on the cash reserves you have accumulated over your lifetime gives you long-term financial security and can help you go through a bad period in life. Even if you don’t have any such emergency you can access the life insurance money through withdrawals or policy loans and spend it on education or opportunities you deem rare and valuable.

It is important to determine one’s desired duration of coverage and buy a level-premium policy as surprise increases in premium can leave you panicking.

Protection for the common man

We live in uncertain times – a risk gone wrong or some tragic accident can wreak havoc if you are one of the “small guys” in your industry. Thankfully, insurance has come as a boon for the common man or the average middle class individual. The truth is that rich and powerful people can afford to take risks since one wrong financial decision will not harm them but most of us can’t take financial risks (unless you are insured). However insurance allows small guys to take risks that can pay off in the long run and saves the market from becoming a monopoly dominated by a few powerful players. Though a lot has been written about them earlier, it is difficult to explain how helpful life and health insurance policies are for the common man.

Peace of mind

Lenders require insurance because when financial risks go wrong – such plans can act as a safety net and help a person from going bankrupt. So insurance can provide you with something very rare in the modern world, peace of mind. In fact many have said insurance is the price you pay for getting peace in life. Ask yourself, “Would my death cause financial problems for someone?” If the answer is yes, you must immediately get life insurance – a product that can save your financial future from catastrophic effects of illness and death.

Retirement

Everyone wants to retire in peace. Although plans exist for insuring you against chronic illnesses and disabilities, there are many problems health insurance policies overlook. Such plans might not cover adult day care services, nursing homes and assisted living. You never know what life holds and it is important to get a plan that will take care of you as you get older.

You might have a well-paying job, a happy family and be in the pink of your health but a sudden untoward incident can take it all away since the only thing predictable about life is that it is very unpredictable. Insurance can take charge of your financial life and ensure you or your loved ones are not in trouble when something unfortunate happens.
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