Your financial plan is not complete without a wealth protection plan.
We all focus on wealth creation and neglect wealth protection.
1. How prepared are you for huge emergency medical bills, long term illnesses?
2. How would your family fare in life if you got critically ill, had a permanent disability or even died?
3. How would you manage if your business, property or home suffered a major catastrophe?
These are all hard conversations that we avoid but are finding more of us unprepared.
Wealth protection involves strategies and practices designed to safeguard your assets from risks. Using insurance as a means of wealth protection is a smart strategy to mitigate risks and safeguard your assets.
Best Practices for Using Insurance in Wealth Protection
Evaluate Coverage Needs: Assess your personal and business needs to determine the appropriate types and amounts of insurance.
Shop Around: Compare policies from different providers to find the best coverage and rates.
Regular Reviews: Periodically review your insurance policies to ensure they still meet your needs, especially after major life events (e.g., marriage, having children, or starting a business).
Consult Professionals: Work with insurance agents or financial advisors to create a comprehensive plan that aligns with your overall wealth protection strategy.
By incorporating these types of insurance into your financial plan, you can create a solid foundation for protecting your wealth against unforeseen events.
Insurance Premiums are affected by the following factors:
– Age
– Gender
– Smoking status
-Medical history
– Policy duration
Life insurance is cheaper with age. That means you can secure a good protection cover with low premiums at a young age. But if you wait until you get older, it will be more expensive for you to get the same cover meaning you will pay way higher premiums.
Wealth Protection Covers
1. An emergency fund – Helps you cater for financial emergencies without taking a loan or selling your assets
– Helps you meet your financial obligations in case of job loss or career break
2. A medical cover
Hospital bills can quickly force you to sell all your assets as health is the ultimate wealth.
Medical covers help reduce the burden of unexpected medical bills.
3. Life insurance
Whole life insurance offers an ideal income protection cover in case the policy holder dies. This means that your family or dependents can use the proceeds of the claims to settle family expenses for a good period.
Additional protections against critical illnesses like major organ transplants, cancers, etc are also very essential as they covers costs associated with long-term care services, protecting your savings from being depleted by medical expenses in later life.
Other Life Covers to consider include:
–Family income protection: provides financial support to your family in the unfortunate event of the insured’s untimely death. This solution pays beneficiary (ies) a monthly income equal to a chosen sum assured for the rest of the chosen benefit period.
-Car insurance: provides coverage for risks such as accidents, theft, third-party liability, and damage to the vehicle.
–Business and property protection: Covers damage to business property, including buildings and equipment such as fire, burglary, electronics, and public liability, and money, goods in transit, work injury, political violence and terrorism.
–Home insurance: Covers damages to your home and personal belongings, as well as liability for accidents that occur on your property.
-Travel insurance: Offers coverage for trip cancellations, lost luggage, and medical emergencies while traveling, protecting your investments in travel
-Personal Accident covers: Covers death and total permanent disability and marginal hospitalization expenses arising out of an accident. This cover is beneficial to avoid unplanned costs and the increased administrative burden of filing & settling claims.
-Last Expense covers: cover that helps families to deal with the burden of meeting the last respect expenses on the death of a family member
Why is Life insurance important?
1. Income protection.
Life insurance payouts help replace income of a sole bread winner in a family.
In the events of death, critical illness or personal accident, your paycheck as the main or sole breadwinner is replaced by the life cover payouts.
2. Wealth preservation
Insurance payouts are tax free. Hence this aids in a tax free wealth transfer from one generation to the other.
Life polices cannot be contested. You don\’t go through probate courts when one dies.
3. Enhance your Estate planning
Life insurance can be used for estate planning by making the family trust fund the beneficiary of the life cover.
Life insurance policies inject liquidity in the trust funds as they are mostly paid within 2 weeks.
This ensures that the family isn\’t stressed or desperate to liquidate any investments prematurely in the case of death or incapacitation.
4. Ensures continuity in the family unit.
It allows family members to focus on healing because money isn\’t a big challenge.
A whole life policy has both living and death benefits.
When critical riders like a critical illness cover or a personal accident rider are added, it becomes equally important to anyone regardless of age.
Credit: Gichuki Kahome on X, ChatGPT, Britam website
To sign up on any of the above cover:
Contact Gallin Wekesa
0712870447 gallywexa@gmail.com gwwekesa@britam.com
Financial Advisor at Britam