Insurance/Takaful - Do We Need Any?
Life is not a bed of roses. As much as we plan for it, something is always out of our control.
What is more frustrating is that an unpleasant event often affects our financial standing. What is even more devastating is that sometimes, it affects our ability to lead life to the fullest.
Fortunately, there is a way to mitigate the impact, and we can do it by developing a risk protection plan by including insurance and Takaful in our financial planning.
Insurance and Takaful is essential in financial planning for a reason such as:
1. Mitigate Risk
As we already know, life is full of uncertainties, and unexpected events can lead to financial losses.
Insurance and Takaful can facilitate mitigating these risks by providing a financial safety net that will ensure that you and your dependents will not face a sudden and significant financial burden in case of an unfortunate event.
2. Protection of Assets
Insurance and Takaful will help to protect our assets, such as cars, homes, and personal belongings. Without the protection, we could suffer significant losses if the assets are damaged, stolen, or destroyed.
Just imagine what will happen if you are involved in a car accident and do not have insurance to cover the damage? Whether you like it or not, you might need to take out your savings to repair your car.
When this happens, your savings will be depleted, and you will have to start reinvesting from zero.
If you have insurance/takaful, the compensation claim will cover the necessary cost to get you back to where you were before the accident happened.
3. Healthcare Costs
Medical expenses can be substantial, especially if you are injured because of an accident or you are diagnosed with a severe illness such as cancer.
Sometimes, the illness or the injury takes a long time to heal, and during that period, you might not be able to work or, in the worst case, lose your job.
Health insurance will help ensure you have access to medical care without depleting your savings or going into excessive debt.
4. Income Replacement
Life Insurance policy will provide compensation in the event of the primary breadwinner's death or if they cannot work due to injury.
As such, it will help to ensure that your family's financial needs are met so they can continue living comfortably while rebuilding their lives.
5. Business Continuity
Insurance and Takaful can also help business owner protect their business from financial losses due to events like the death of an owner or a key employee's disability or if their product is stolen.
A good risk protection plan will give us peace of mind, allowing us to focus on our daily lives and financial goals without constantly worrying about unforeseen events derailing our plans.
However, remember not to be overprotected as it is only a waste of money. One insurance policy is enough for general protection, such as for home and car, as we can only claim from one insurance company.
In summary, insurance is an essential component of financial planning. It helps protect our financial well-being by reducing the impact of unexpected events, thus ensuring that we and our loved ones can maintain our lifestyle, even in challenging circumstances.
It provides a crucial safety net to prevent financial ruin and help you achieve your long-term financial goals.
