Many people make the mistake to think that financial planning or estate planning is about death and retirement. Nothing could be further from the truth! Your estate is everything you earn, own and how you use it, grow it and dispose of it for future generations.
In other words, estate planning involves your life TODAY.
That is why, once we have looked at the ultimate event, death, and how we have to plan for it, then we start planning for ourselves while we live.
Once more we will consider the threats to our wealth, and then we are going to start building our wealth.
We need to find answers to the following what-if questions:
What if I become disabled, for what-ever reason, and cannot do my job?
What if I am diagnosed with a major sickness, such as cancer, and cannot work for a few weeks or even months and have to pay expensive medical treatment?
What if I am downsized at work, or the company goes belly-up?
What if I am in a major car accident and I don’t have transport and perhaps have to pay for the other guy’s car too?
The first 3 questions can be covered with insurance, and I really do think that more people should consider some form of income protection to protect themselves financially against adverse events, such as disability and sickness. Most policy salesman would gladly help you with these.
The question about downsizing is very important. Firstly it affects the affordability of all your other plans and things you put in place to protect yourself. But you cannot really buy insurance against it. The only insurance are the things that you do to stay marketable in the job market and the things you put in place to be less dependent on a salary. But please don’t ignore it, since this could be your biggest wealth and the shortest route to financial freedom!
Lastly, don’t try to save on short term insurance. This is what I do for a living, and I see many people who want to save R1 only to pay THOUSANDS when there is a claim. It is simply not worth doing it.
Obviously we are looking at protecting ourselves against unforeseen mishaps. It might never happen, therefore we must do it as cheaply as possible. But, if it should happen, we must have the best possible. Starting a new life in a wheelchair, and fighting against poverty and with a bad service provider, I don’t know if there can be anything worse!
I know, it is not nice to consider all these things, and I know it is grudge payments, but plan thoroughly, and trust me, if you do what I suggest, you will not need more policies every year.