Insurance Planning is the process of identifying risks in your life and arranging the right insurance covers so that an unexpected event doesn’t destroy your finances or your family’s future.
Core components of insurance planning
1. Life insurance — income protection
Purpose:
- Replace lost income
- Clear liabilities (home loan, education goals)
- Secure dependents’ lifestyle
Best suited:
- Pure term insurance (high cover, low cost)
Avoid mixing:
- Insurance ≠ investment
2. Health insurance — medical risk protection
Covers:
- Hospitalisation
- Major treatments
- Rising healthcare costs
Planning focus:
- Adequate sum insured
- Family floater vs individual
- Coverage beyond employer insurance
3. Disability & critical illness cover
Often ignored, but crucial:
- Loss of earning ability can be more damaging than death
- Critical illness drains savings fast
4. General insurance — asset protection
Protects:
- Home
- Vehicle
- Business assets
This prevents one accident from becoming a financial crisis.
How insurance planning is done
A proper insurance plan looks at:
- Income & expenses
- Dependents
- Existing insurance
- Liabilities
- Inflation & medical cost trends
Then answers:
Which risks to self-bear?
How much cover is required?
Which risks to insure?