Protect your finances with Insurance
So now that you have accumulated some wealth, get some insurance to make sure you protect it so you don’t lose it!
How do you protect your finances? Mostly it’s a case of ‘spending money to protect your money’.
Have you got these ones covered?
- House and contents – because your house is such a high value asset, you MUST insure your home if you own it [in fact it’s probably required as part of your mortgage]. Also insure contents and even pets!
- Car and vehicle – any vehicle you own is also a major asset, and would cost you personally to replace in the event of an accident. Insure for damage you may cause to your vehicle and also for damage that your vehicle may cause to other people or property.
- Public liability – because of the increasing cases of litigation, many people are now taking out public liability [often as part of their home cover] to cover the costs of other people suing you for negligence. Of course, you still need to do everything reasonable to ensure you don’t get sued in the first place.
- Salary continuance – most people live from pay packet to pay packet, regardless of how big or small that pay packet is. How would you cope if you suddenly lost your job or couldn’t work due to prolonged illness or disability? Most families can’t cope, so salary insurance is essential, particularly if your are the primary income earner.
- Health – more important in some countries than others, a health policy allows you to receive medical treatment when you need it. It saves you from outlaying huge medical costs if you aren’t covered, and allows you to get treatment when you need it so your career isn’t as affected.
- Life/ death – you obviously won’t care much about this when you’re dead, but will your family cope? If you are the primary income earner (and even if you’re not) it’s satisfying to know you’re your family will be secure financially if you do pass on.
- Funeral Plan – equally important for your grieving family, having a funeral plan will ensure that your family won’t be out of pocket for funeral expenses.
- Last Will and Testament – It is very important to keep your Last Will and Testament up to date and in order – failure to do so may leave your finances and assets tied up for years, leaving your family with nothing. Make sure the process of distributing your assets goes as smoothly as possible.
There is an insurance record sheet in the ToolBOX, under the section on “Financial Tools” to help you keep track of your insurances.
Or sister site Your Money and Finance also has a section dedicated to Wealth Protection...
And don't forget to include all premiums in your budget!
Of course, there are some things you just can’t insure – for example you can’t insure against a stock-market crash, poorly performing stocks or incompetent fund managers.
But you can diversify your investments so you don’t have all your eggs in the one basket – if one investment doesn’t perform, hopefully the others can smooth things over.
But as long as you ‘have’ something, there is always a risk of losing it – so be prepared and protect your wealth as best you can and get the most of your cover.