Financial Planning – Protection #2

Disclaimer : I am not a qualified financial planner. This post is not intended to be a financial advice. You should seek professional advice from a qualified financial advisor.

So my earlier post shared that my basis for life coverage was based on 10 years.. at least up to my early 30s. What about after that and other areas of protection?

After early 30s, I realised that it would not be feasible to keep up with income increases. The additional health checks and the premium increases for the same amount of coverage just does not make sense to me.

The only other reasonable option is to assume an upper income limit i.e. cut the unnecessary spending, and settle on a new “normal”. This means as income increases, the increase should go into investments, savings, one-off expenses.. basically anything that does not translate into a long term financial commitment.

Following this principle, I added a short 5-year term life insurance to provide additional cover when we bought a new property. The idea is that minimally, if anything were to happen to me, my loved ones will not have to worry about the loan. The 10 years of income coverage will have to be sacrificed and replaced by a property which can be sold for cash.

Similarly, healthcare coverage is not additional coverage but early payout of life coverage. My concept is to take the money and decide whether to spend the money on treatment or just leave it as a legacy and move on.

Hence, the risk will be on discoveries such as early stage cancer where you are not entitled to pay outs and where the general recommendation would be to go for treatment as the chance of recovery is high.

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