How Do I Determine How Much Insurance I need?

"Too much insurance is a Waste; too little is a Disaster."

Since you will neither want to waste nor put your family in a disaster situation, it is important to determine your insurance needs accurately. This is where you need the service of a professional financial planner or a well-trained insurance intermediary, who have a variety of methods to help calculate your needs.

There are both General and Life Insurance needs. Protecting your house against fire and your car against accidents are but two common instances of general insurance needs. In the case of life insurance, probably one of the most common uses is for income replacement purpose and family cash need protection when breadwinner dies.

Families need survival income and funds for immediate uses when death, disability or critical illness occurs to the breadwinner. Apart from the need to replace the breadwinner's income, the following are some expenditures that increases the cash needs of a family:

1) Final expenses - Medical treatment and consultation prior to death, funeral expenses,

2) Estate settlement expenses - Legal fees and related disbursement (to obtain Grant of Probate / Letter of Administration), final income taxes, stamp duty for transfer of properties, general expenses incurred by Executor when administering your estate etc.

3) Outstanding financial commitments on mortgage loans, motor hire purchase, credit cards,etc.

4) Family household expenses - Calculated up to the time the youngest child complete higher education.

5) Spouse survival income- Calculated up to the average mortality

6) Children's higher education needs - Timing of the funding is important, as is who to hold the funds in trust to ensure that is properly utilized.

Do You NEED Financial Planning??

Checklist below will help you determine if you Need in Financial Planning. If your answer is "YES" to any of the situation below, you probably Need Financial Planning:

• You are earning a decent monthly income but you lose control of where your money goes every month.
• You have not examined your tax affairs thoroughly and would like to know if you can minimize your tax payable.
• You have numerous bank loans and /or outstanding credit cards' balances and your finances are in a mess.
• You are concerned of your family's financial needs if you are unexpectedly disable or die.
• You are concerned about the high cost of medical treatment.
• You are too busy to handle your own investments and want to entrust your savings to a professional.
• You are planning for your children's higher education of your choice.
• You want a comfortable retirement but do not know how much you need or how to save and invest to meet the need.
• You want to leave a legacy of good family values by distributing your wealth in a responsible manner to your loved ones.