Understanding the Financial Planning Process
Personal financial planning is growing in importance for the average Malaysian. Uncertain economic times, changing legislation, the proliferation of new financial products and lack of time make it difficult for consumers to use their resources effectively. A well-designed financial plan can help you do just that and, along the way, give you a
greater sense of financial security.
But what's involved in financial planning? Many of us tend to equate financial planning with investment management and neglect the other components that are just as important to financial independence. Reducing taxes, providing adequate insurance coverage and protecting our families through proper estate planning are key concerns as well.
One common misconception is that you have to have a lot of money to benefit from financial planning. Not so. In fact, financial planning can sometimes be the greatest help to someone who is just starting out and wants to build their financial future from the ground up.
If you have the time and the interest to learn about financial planning techniques and put them into practice, you can get a large part of the groundwork done on your own. But you may find it useful to consult with a professional financial planner when it comes to more involved strategies in tax planning and estate planning.
Whether you go it alone or hire a planner, the steps in the process should be the same. Although every planner has their own unique style, there is a recognized process that defines the financial planning process.
1. Establish Where You are Today
The first step is to establish where you're at today. You need a starting point for developing goals and measuring future progress. If you're going to work with a professional planner, they will usually want you to complete a questionnaire that will give them all the relevant financial background. If you're going it alone, you may think you have a pretty good idea of your situation without bothering with the specifics. Don't make that mistake. Take the time to collect accurate information - some of the details may surprise you.
The information you need includes:
* assets and liabilities - everything you own (real estate, investments, pensions) and everything you owe (mortgages, lines of credit, outstanding credit card payments etc.)
* current sources of income - salary, investment income etc.
* current expenses
* tax returns
* investment records
* insurance policies - life, property, disability and general liability
* company benefits - pension, medical, life and disability insurance
* wills and powers of attorney
2. Develop Financial Goals
Once you know where you're at today, you're in a position to develop some goals for the future. Are you looking to set up your own business in a few years? Retire? Put your kids through university? Most of us have a number of long-term goals we'd like to work towards. But we may not be able to achieve them all. A financial planner can help you to clarify your own attitudes and values, which is an important step towards setting priorities for the future. Only you can decide whether it's more important to provide for your children's education, help support elderly parents or fulfill your dream of early retirement. But a financial planner can help you to explore your own values in a way that will make it easier for you to see where your priorities really are.
3. Analyze Your Current Situation and Prioritize Goals
Now you need to take a good hard look at your current situation in relation to your goals to see what problems are standing in your way. Some of these may be quite apparent to you. Perhaps you know that you don't save any money towards your goals, or that you're so deep in debt, there isn't anything extra to save. Poor money management skills are probably the issue here.
You may need the assistance of a professional to identify other problems. Are you paying too much tax? While all of us feel that we are, a financial planner will know if there are specific tax-reduction strategies you're missing. Are you adequately insured? A financial planner can calculate the benefit that you or your survivors would receive from your current coverage and compare this to the amount needed.
4. Develop Financial Plans and Strategies
Develop a strategy to address the problems. With a professional planner, this will usually take the form of written recommendations and alternative solutions. On your own, you'll probably mull over the problem and decide in your head what you're going to do about it. It's still a good idea to commit your decision to paper, however. This formalizes your course of action and gives you something to refer back to after implementation.
It's important that your strategy be specific. Saying that you're going to start saving money is not a strategy -- it's a recipe for failure. You need to identify exactly how much you're going to set aside every week, every pay cheque or monthly. You also need to determine how you're going to do this. Will it be by participating in your company savings plan via payroll deduction? Or will you arrange with your bank to transfer money into a money-market fund each month? What is your timeline for making these arrangements? How will your savings be invested once they start to accumulate? All these factors should be incorporated into your strategy.
5. Implement Your Financial Plans
Putting your plan into action is the next step. The best plan in the world isn't worth anything if it gets filed away in a drawer. Unfortunately, this often happens when people go it alone. We all have a tendency to procrastinate, and financial matters often get left behind in the crush of day-to-day responsibilities. A financial planner can be of help here, too. Realistic timeframes can be developed for the various steps that must be completed. The planner may be able to perform some of the action steps for you, and can follow up with you on other items to make sure that timeframes are adhered to.
6. Monitor Progress and Revise Your Financial Plans
Finally, a financial plan is never written in stone. Circumstances change, and your plan may need to be adapted so that you stay on track with your goals. You should review your plan at least once a year to assess your progress and see if changes need to be made.
Your net worth statement can be a helpful tool here. Use it as a benchmark to measure your progress. Has your net worth increased by as much as (or more than) you expected? If not, you need to find out why and take some corrective action. A financial planner can also provide input into changes in legislation and new investment products that you may want to incorporate into your planning strategies.
Dynamic Investments & Protection
http://greateastern-balachandran.blogspot.com
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance & Financial planning.
Tuesday, April 27, 2010
Sunday, April 25, 2010
Financial Planning Strategies for 21st Century
Financial Planning Strategies for 21st Century
Financial planning strategies in the 21st Century need strategies of the new era -- strategies for the info-tech era, that can bring multiple streams of increasing prosperity. That'd be nice, wouldn't it? Money to buy whatever you want... houses, cars, travel, freedom. Surplus to share with the people you care most about. Security. Peace of mind.
Below are some financial planning strategies for the 21st Century.
Understand the Value of Money
Learn how to value each and every ringgit that flows into your life. Because you can achieve financial freedom on just a Ringgit a Day! That's right. A Ringgit a day. When you think about it, financial freedom all starts with a single Ringgit.
You see, prosperous people don't think a ringgit "is just a ringgit." They imagine it is a seed... a money seed... that has the power to grow into a huge money tree, giving off fruit to fulfill every one of their dreams.
And they are absolutely right.
So, how much is one those seeds really worth? That depends on how long you let it grow and at what rate of growth. Let's suppose you take one ringgit and put it into a special bank account that will let the ringgit grow, untouched by taxes and fees. How long will it take for this ONE SINGLE RINGGIT BILL to grow into a MILLION RINGGITS? That depends on what interest rate the bank account pays. If it's like ordinary bank accounts, paying 3 to 6% interest, then it's going to take a long, long time.
At 3% it will take 468 years for a single ringgit bill to grow into a million ringgits. But at about ten percent interest, it will grow into a million ringgit at only 56 years. And 10% returns are historically achievable by proven investment instrument such as unit trust or investment linked funds with long term investment horizon.
Remember, money that's compounding never sleeps. Every second of every day. 24 hours a day. 365 days a year. You've got to figure out a way to get money working for you instead of you working for money. And all it takes is a few lousy bucks a day! You don't have to be a financial genius. You don't have to own a big company. You can do it from your kitchen table using the money that you're now foolishly throwing away. If you just re-divert a few of your ill-spent ringgits and funnel them to some well-timed investments, you can achieve financial success. It's within your grasp.
Constantly save. Consistently Invest. Like clockwork. Old Faithful. It might be boring. It might be dull. It might be hard. It might take discipline, persistence, sacrifice. No matter. Just do it.
Suppose you could sock away RM200 per month. You set a target to have it grow at 20% per year for the next 20 years. Now, 20% is no small feat, but with some fancy stock picks, some real estate and perhaps a small business on the side, you think you can pull it off. According to a financial calculator, RM200 per month at 20% for 20 years grows into RM632,000. Not bad!
Now, suppose, instead of starting now, you wait a year to get started. This leaves you only 19 years of growth instead of 20. How much is in your bank account in 20 years from today? Only RM516,000. That's RM116,000 less than what you could have had if you had started on schedule. In other words, your procrastination cost you RM116,000 future ringgits! Procrastination is expensive.
For each of the 365 days that you waited, your future portfolio was shrinking by over 300 ringgits. (116,000 / 365 = RM317.81) In other words, every day you put this plan off, costs you RM300 future ringgits. Every hour you wait costs you more than RM13. You are wasting 13 ringgits an hour, 24 hours a day.
What if you were to invest the same RM200 per month over thirty years? The cost of waiting that extra year is now a whopping RM842,803. That's right! Waiting an extra year cost you almost a million future ringgits. That's over two thousand ringgits a day. Or almost RM100 per hour!
Let me say this again for emphasis. Every day you wait, every hour you delay, is like burning up your financial future. Do it now. Yes, it will take sacrifice. It means deferring gratification for a while to allow your money tree to grow. When you prematurely pick the fruit from your money tree, you stunt it's growth and this can dramatically slow down the time for you to enjoy a fully matured, fruit bearing money tree.
Control It
Most people have one simple faucet or main source of income -- their job. This income flows into the bathtub of their life and flows out through the drains at the bottom. Most everyone spends every sen their earn. They never retain any money in savings. They spend it all. Obviously, the only way to have an overflowing prosperity in your life is to plug up those holes and to turn on more faucets... to have multiple streams of income.
The key to financial planning is cash flow management. You've not only got to get the cash to flow into your bathtub. You have to manage the leaks so that there is money left over at the end of the month (profit.) With this profit you buy stuff - assets. You may also buy stuff by going into debt. The object of the money game is to accumulate enough assets so that eventually the income from your personal assets will support you instead of your personal skills.
Save it
Strategy #3 is to save money. Wealthy people love to save money... you know, to buy things at wholesale. They never like to pay retail for anything. And now, you know why. But they don't stop there. You see, anyone can save money by buying at a discount... but do they save the money that they save? That's the hard part. A friend of mine quit smoking and was bragging about the RM50 a month she was saving by not smoking. I asked, "Where is the RM50?" She didn’t know. She had saved the money but she hadn't saved it... put it away. When you save money by changing your buying habits, take the money out of your purse or wallet and get it out of your spending grasp. Put it into a savings jar, and frequently deposit this money into your savings account. That’s when you’ve truly save it.
And here’s another tip. Would you like to learn how to cut your living expenses by 30% in 30 seconds? You would? Well, take out your credit cards, put one away for emergencies, and cut up the rest. Statistics have proven that this simple exercise will automatically and almost effortlessly cut your living expenses by an average of 30% over the next 12 months.
Invest it
With the money you’re saving plus the 10% of the money you pay yourself off the top, you must learn how to invest your money at billionaire rates. Anyone can park their money at 3%. The trick is to get it to grow at 10 to 20%. There are many traditional investments that are ideal to park your money. At the low end of the interest scale are bank savings accounts and fixed deposits. Then, you have government treasuries and bonds. Up the ladder are corporate bonds... then the stock market... and some of the most popular investments these days... Mutual Funds or Investment Linked Funds.
You should have money in all of these areas. Imagine a series of buckets where money is siphoned off from your bathtub. The first bucket should be your emergency bucket. Let your 10% flow there first until you have at least six months worth of living expenses saved. You'd be surprised how many people in this country are only one pay-cheque away from bankruptcy. Don't let that be you. This money should be in the safest place, a bank account at the highest interest rate you can find where you can access to your money within days. Once this first bucket is filled up, the stream of 10% will overflow into one of three additional buckets -- labeled, conservative investments, moderately risky investments and very risky investments. If you are older, you should have more of your money in the conservative bucket. The younger you are the more risk you can take. Check your investment risk profile with our Risk Profile Test.
The best way to invest for average people is in Mutual Funds or Investment Linked Funds. A mutual fund is a collection of individual stocks purchased by a major company and managed by professionals. You give them a small amount of money, they add it to that of thousands of other investors and they watch over it for you.
Here are a few rules about investing.
1. The longer you invest (leave your money in the market) the lower your risk.
2. Don’t invest unless you’re willing to leave it for 5 years or more. It's sole purpose is to grow and compound. Anything shorter than a year is gambling.
3. Remember, it's almost impossible to buy low and sell high in the short run. So don't play the market.
4. The key is long term dollar cost averaging. Dollar cost averaging simply means, you should invest every single month, regardless of where the market is heading. Don't even read the newspapers... just buy month in and month out. Over the long run, this is the best strategy. Do it automatically. Inform your mutual fund company to automatically withdraw the funds from your account each month.
Shield It
Making money is one set of skills. Keeping it is another. As you work toward your financial goals, you will need to learn how to preserve the wealth you are creating.
The worst mistake one can make today is leave large amounts of personal assets unprotected. Get a liability insurance, get a health and life insurance -- you don't want to spend all your hard-earned money on medical fees should you fall prey to serious illness or become disabled, do you.
Contact me to inquire about financial and life insurance planning.
Dynamic Investment & Protection
http:greateastern-balachandran.blogspot.com
Financial planning strategies in the 21st Century need strategies of the new era -- strategies for the info-tech era, that can bring multiple streams of increasing prosperity. That'd be nice, wouldn't it? Money to buy whatever you want... houses, cars, travel, freedom. Surplus to share with the people you care most about. Security. Peace of mind.
Below are some financial planning strategies for the 21st Century.
Understand the Value of Money
Learn how to value each and every ringgit that flows into your life. Because you can achieve financial freedom on just a Ringgit a Day! That's right. A Ringgit a day. When you think about it, financial freedom all starts with a single Ringgit.
You see, prosperous people don't think a ringgit "is just a ringgit." They imagine it is a seed... a money seed... that has the power to grow into a huge money tree, giving off fruit to fulfill every one of their dreams.
And they are absolutely right.
So, how much is one those seeds really worth? That depends on how long you let it grow and at what rate of growth. Let's suppose you take one ringgit and put it into a special bank account that will let the ringgit grow, untouched by taxes and fees. How long will it take for this ONE SINGLE RINGGIT BILL to grow into a MILLION RINGGITS? That depends on what interest rate the bank account pays. If it's like ordinary bank accounts, paying 3 to 6% interest, then it's going to take a long, long time.
At 3% it will take 468 years for a single ringgit bill to grow into a million ringgits. But at about ten percent interest, it will grow into a million ringgit at only 56 years. And 10% returns are historically achievable by proven investment instrument such as unit trust or investment linked funds with long term investment horizon.
Remember, money that's compounding never sleeps. Every second of every day. 24 hours a day. 365 days a year. You've got to figure out a way to get money working for you instead of you working for money. And all it takes is a few lousy bucks a day! You don't have to be a financial genius. You don't have to own a big company. You can do it from your kitchen table using the money that you're now foolishly throwing away. If you just re-divert a few of your ill-spent ringgits and funnel them to some well-timed investments, you can achieve financial success. It's within your grasp.
Constantly save. Consistently Invest. Like clockwork. Old Faithful. It might be boring. It might be dull. It might be hard. It might take discipline, persistence, sacrifice. No matter. Just do it.
Suppose you could sock away RM200 per month. You set a target to have it grow at 20% per year for the next 20 years. Now, 20% is no small feat, but with some fancy stock picks, some real estate and perhaps a small business on the side, you think you can pull it off. According to a financial calculator, RM200 per month at 20% for 20 years grows into RM632,000. Not bad!
Now, suppose, instead of starting now, you wait a year to get started. This leaves you only 19 years of growth instead of 20. How much is in your bank account in 20 years from today? Only RM516,000. That's RM116,000 less than what you could have had if you had started on schedule. In other words, your procrastination cost you RM116,000 future ringgits! Procrastination is expensive.
For each of the 365 days that you waited, your future portfolio was shrinking by over 300 ringgits. (116,000 / 365 = RM317.81) In other words, every day you put this plan off, costs you RM300 future ringgits. Every hour you wait costs you more than RM13. You are wasting 13 ringgits an hour, 24 hours a day.
What if you were to invest the same RM200 per month over thirty years? The cost of waiting that extra year is now a whopping RM842,803. That's right! Waiting an extra year cost you almost a million future ringgits. That's over two thousand ringgits a day. Or almost RM100 per hour!
Let me say this again for emphasis. Every day you wait, every hour you delay, is like burning up your financial future. Do it now. Yes, it will take sacrifice. It means deferring gratification for a while to allow your money tree to grow. When you prematurely pick the fruit from your money tree, you stunt it's growth and this can dramatically slow down the time for you to enjoy a fully matured, fruit bearing money tree.
Control It
Most people have one simple faucet or main source of income -- their job. This income flows into the bathtub of their life and flows out through the drains at the bottom. Most everyone spends every sen their earn. They never retain any money in savings. They spend it all. Obviously, the only way to have an overflowing prosperity in your life is to plug up those holes and to turn on more faucets... to have multiple streams of income.
The key to financial planning is cash flow management. You've not only got to get the cash to flow into your bathtub. You have to manage the leaks so that there is money left over at the end of the month (profit.) With this profit you buy stuff - assets. You may also buy stuff by going into debt. The object of the money game is to accumulate enough assets so that eventually the income from your personal assets will support you instead of your personal skills.
Save it
Strategy #3 is to save money. Wealthy people love to save money... you know, to buy things at wholesale. They never like to pay retail for anything. And now, you know why. But they don't stop there. You see, anyone can save money by buying at a discount... but do they save the money that they save? That's the hard part. A friend of mine quit smoking and was bragging about the RM50 a month she was saving by not smoking. I asked, "Where is the RM50?" She didn’t know. She had saved the money but she hadn't saved it... put it away. When you save money by changing your buying habits, take the money out of your purse or wallet and get it out of your spending grasp. Put it into a savings jar, and frequently deposit this money into your savings account. That’s when you’ve truly save it.
And here’s another tip. Would you like to learn how to cut your living expenses by 30% in 30 seconds? You would? Well, take out your credit cards, put one away for emergencies, and cut up the rest. Statistics have proven that this simple exercise will automatically and almost effortlessly cut your living expenses by an average of 30% over the next 12 months.
Invest it
With the money you’re saving plus the 10% of the money you pay yourself off the top, you must learn how to invest your money at billionaire rates. Anyone can park their money at 3%. The trick is to get it to grow at 10 to 20%. There are many traditional investments that are ideal to park your money. At the low end of the interest scale are bank savings accounts and fixed deposits. Then, you have government treasuries and bonds. Up the ladder are corporate bonds... then the stock market... and some of the most popular investments these days... Mutual Funds or Investment Linked Funds.
You should have money in all of these areas. Imagine a series of buckets where money is siphoned off from your bathtub. The first bucket should be your emergency bucket. Let your 10% flow there first until you have at least six months worth of living expenses saved. You'd be surprised how many people in this country are only one pay-cheque away from bankruptcy. Don't let that be you. This money should be in the safest place, a bank account at the highest interest rate you can find where you can access to your money within days. Once this first bucket is filled up, the stream of 10% will overflow into one of three additional buckets -- labeled, conservative investments, moderately risky investments and very risky investments. If you are older, you should have more of your money in the conservative bucket. The younger you are the more risk you can take. Check your investment risk profile with our Risk Profile Test.
The best way to invest for average people is in Mutual Funds or Investment Linked Funds. A mutual fund is a collection of individual stocks purchased by a major company and managed by professionals. You give them a small amount of money, they add it to that of thousands of other investors and they watch over it for you.
Here are a few rules about investing.
1. The longer you invest (leave your money in the market) the lower your risk.
2. Don’t invest unless you’re willing to leave it for 5 years or more. It's sole purpose is to grow and compound. Anything shorter than a year is gambling.
3. Remember, it's almost impossible to buy low and sell high in the short run. So don't play the market.
4. The key is long term dollar cost averaging. Dollar cost averaging simply means, you should invest every single month, regardless of where the market is heading. Don't even read the newspapers... just buy month in and month out. Over the long run, this is the best strategy. Do it automatically. Inform your mutual fund company to automatically withdraw the funds from your account each month.
Shield It
Making money is one set of skills. Keeping it is another. As you work toward your financial goals, you will need to learn how to preserve the wealth you are creating.
The worst mistake one can make today is leave large amounts of personal assets unprotected. Get a liability insurance, get a health and life insurance -- you don't want to spend all your hard-earned money on medical fees should you fall prey to serious illness or become disabled, do you.
Contact me to inquire about financial and life insurance planning.
Dynamic Investment & Protection
http:greateastern-balachandran.blogspot.com
Wednesday, April 21, 2010
How to Survive on a Low Income
How to Survive on a Low Income
When people talk about saving money consistently for a rainy day, most often than not the feedback would be “If I had that extra money to save, I would.” These are the people that pay their bills first and only use whatever balance leftover to pay themselves later.
I can seriously identify with this situation when I first started working after graduating with a Automotive Engineering diploma years ago. My starting salary was RM1200 which is considered the lowest starting salary. After deducting EPF, income tax and SOCSO, my take home pay was about RM1000. This is the money I used to pay for my bills and other living cost. Whatever amount leftover at the end of the month will be my savings. Therefore my savings fluctuated every month. It was hard to meet my savings goal in this situation.
Earning RM1500 may not be considered low income to some people and for me it was acceptable back then. I cannot imagine how those earning below RM1000 can manage their money to make it stretch sufficiently. This is considered low income to me. So, I considered myself lucky to be earning above that. I had two choices, one was not to use up all of my income and to pay myself first and the other was to earn higher. Going with the first choice was practical as it was easily within my control.
How I survive and manage to save money
There were several factors that enabled me to pay myself first and save a portion of my take home pay.
• In the beginning of my career, I stayed home with my parents and hence did not have to pay rent even now.
• I used my parents’ old car to drive to work and only had to pay for the petrol. I did not have to fork out money to service a car loan.
• I had no subscription bills to pay like ASTRO, hand phone, magazines, internet line, etc.
• My employer covered my medical and dental bills. Lunch meals and work uniforms were also provided. So shopping for work clothes was unnecessary. I also did not waste money going out for lunches or coffee breaks.
• I did not go out much for entertainment preferring to stay home most of the time.
Most of my income went towards food or groceries, personal necessities, personal insurance, petrol and utilities. Hence, I was able to save money and invest it, albeit slowly.
I believe a whole book can be written when it comes to surviving on a low income. It is difficult but not totally impossible especially when you do not have a family to support yet. The important lesson for me back then was and still is “learning to live without”. My constant motto was and still is “Do not buy if you cannot afford it or if you do not need it.”
As the years go by, my earnings increased gradually but I still live the same frugal lifestyle. The pressure is stronger as I am now supporting a family. Although the income is higher, the responsibilities, bills and commitments are also much higher. For example, I have set a target to put aside about RM300, 000 as an education fund my daughter.
When there is a family to support, I consider RM5000 to be low income and insufficient to lead a reasonably comfortable lifestyle. What do you consider to be low income for a single person and for a family of four (husband and wife with two kids)?
Life is full with surprises. How much saving we have to sustained on rainy days?
Call me for Life Financial Planning & Insurance.
When people talk about saving money consistently for a rainy day, most often than not the feedback would be “If I had that extra money to save, I would.” These are the people that pay their bills first and only use whatever balance leftover to pay themselves later.
I can seriously identify with this situation when I first started working after graduating with a Automotive Engineering diploma years ago. My starting salary was RM1200 which is considered the lowest starting salary. After deducting EPF, income tax and SOCSO, my take home pay was about RM1000. This is the money I used to pay for my bills and other living cost. Whatever amount leftover at the end of the month will be my savings. Therefore my savings fluctuated every month. It was hard to meet my savings goal in this situation.
Earning RM1500 may not be considered low income to some people and for me it was acceptable back then. I cannot imagine how those earning below RM1000 can manage their money to make it stretch sufficiently. This is considered low income to me. So, I considered myself lucky to be earning above that. I had two choices, one was not to use up all of my income and to pay myself first and the other was to earn higher. Going with the first choice was practical as it was easily within my control.
How I survive and manage to save money
There were several factors that enabled me to pay myself first and save a portion of my take home pay.
• In the beginning of my career, I stayed home with my parents and hence did not have to pay rent even now.
• I used my parents’ old car to drive to work and only had to pay for the petrol. I did not have to fork out money to service a car loan.
• I had no subscription bills to pay like ASTRO, hand phone, magazines, internet line, etc.
• My employer covered my medical and dental bills. Lunch meals and work uniforms were also provided. So shopping for work clothes was unnecessary. I also did not waste money going out for lunches or coffee breaks.
• I did not go out much for entertainment preferring to stay home most of the time.
Most of my income went towards food or groceries, personal necessities, personal insurance, petrol and utilities. Hence, I was able to save money and invest it, albeit slowly.
I believe a whole book can be written when it comes to surviving on a low income. It is difficult but not totally impossible especially when you do not have a family to support yet. The important lesson for me back then was and still is “learning to live without”. My constant motto was and still is “Do not buy if you cannot afford it or if you do not need it.”
As the years go by, my earnings increased gradually but I still live the same frugal lifestyle. The pressure is stronger as I am now supporting a family. Although the income is higher, the responsibilities, bills and commitments are also much higher. For example, I have set a target to put aside about RM300, 000 as an education fund my daughter.
When there is a family to support, I consider RM5000 to be low income and insufficient to lead a reasonably comfortable lifestyle. What do you consider to be low income for a single person and for a family of four (husband and wife with two kids)?
Life is full with surprises. How much saving we have to sustained on rainy days?
Call me for Life Financial Planning & Insurance.
Tuesday, April 20, 2010
Who Needs Life Insurance?
Dear All,
Life insurance is designed to protect your family and other people who may depend on you for financial support. If you die and lose your income, the people that are dependent on your financial support will lose that income, so life insurance can help cover some or all of that loss depending on the policy you choose. But there are instances where life insurance can be beneficial even if you have no dependents, such as your desire to cover your own funeral expenses. Here are some guidelines to help you decide if life insurance is the right choice for you:
1. Children: Children do not need life insurance. Yes, there have been cases where life insurance for one's child has been a blessing, but in the majority of cases, children do not need life insurance since no one depends on income from them.
2. Beginning Families: Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income.
3. Established Families: If you have a family that depends on you, you need life insurance now! This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family.
4. Young Single Adults: The reason a single adult would typically need life insurance would be to pay for their own funeral costs or if they help support an elderly parent or other person they may care for financially. Otherwise, if one has other sources of money for a funeral and has no other persons that depend on their income then life insurance would not be a necessity.
5. Non-Child Working couples: Both persons in this situation would need to decide if they would want life insurance. If both persons are bringing in an income that they feel comfortable living on alone if their partner should pass away, then life insurance would not be necessary except if they wanted to cover their funeral costs. But, maybe in some instances one working spouse contributes more to the income or would want to leave their significant other in a better financial position, then as long as purchasing a life insurance policy would not be a financial burden, it could be an option.
6. Elderly: As long as you do not have people depending on your income for support, life insurance at this stage in life would not be necessary, unless again, you do not have any other means to pay for your funeral expenses. But, be aware that purchasing a life insurance policy at this age can be very expensive. Before doing so, first talk to a financial advisor or accountant about looking into other saving options to pay for your funeral costs before considering life insurance.
Dynamic Investments & Protection
http://greateastern-balachandran.blogspot.com
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance & Financial planning.
Life insurance is designed to protect your family and other people who may depend on you for financial support. If you die and lose your income, the people that are dependent on your financial support will lose that income, so life insurance can help cover some or all of that loss depending on the policy you choose. But there are instances where life insurance can be beneficial even if you have no dependents, such as your desire to cover your own funeral expenses. Here are some guidelines to help you decide if life insurance is the right choice for you:
1. Children: Children do not need life insurance. Yes, there have been cases where life insurance for one's child has been a blessing, but in the majority of cases, children do not need life insurance since no one depends on income from them.
2. Beginning Families: Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income.
3. Established Families: If you have a family that depends on you, you need life insurance now! This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family.
4. Young Single Adults: The reason a single adult would typically need life insurance would be to pay for their own funeral costs or if they help support an elderly parent or other person they may care for financially. Otherwise, if one has other sources of money for a funeral and has no other persons that depend on their income then life insurance would not be a necessity.
5. Non-Child Working couples: Both persons in this situation would need to decide if they would want life insurance. If both persons are bringing in an income that they feel comfortable living on alone if their partner should pass away, then life insurance would not be necessary except if they wanted to cover their funeral costs. But, maybe in some instances one working spouse contributes more to the income or would want to leave their significant other in a better financial position, then as long as purchasing a life insurance policy would not be a financial burden, it could be an option.
6. Elderly: As long as you do not have people depending on your income for support, life insurance at this stage in life would not be necessary, unless again, you do not have any other means to pay for your funeral expenses. But, be aware that purchasing a life insurance policy at this age can be very expensive. Before doing so, first talk to a financial advisor or accountant about looking into other saving options to pay for your funeral costs before considering life insurance.
Dynamic Investments & Protection
http://greateastern-balachandran.blogspot.com
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance & Financial planning.
Wednesday, April 14, 2010
What is Financial Planning?
What is Financial Planning?
According to the Certified Financial Planner Board of Standard, financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement.
The financial planning process consists of six steps that help you take a "big picture" look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals.
The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans. As life and circumstance change, so your financial plan will need to be reviewed and revised on a regular basis:
Ensure you are on track to meet your goals
Identify and address new goals and
Make sure the financial tools you are employing still meet your needs.
Steps to the Financial Planning Process:
1. Identifying and setting short, intermediate and long-term goals. Ideally, each goal will have a date and dollar amount attached to it.
2. Evaluating your current situation - cashflow analysis and calculating your net worth. You need to honestly assess your current financial status, including positives and negatives.
3. Review your insurance coverage, including life, disability, home, auto, umbrella liability and long-term care.
4. Review your current tax situation to identify tax-saving opportunities and potential deductions.
5. Review your estate plan to ensure that your will, living will, healthcare power of attorney and other estate planning documents (revocable living trusts and durable power of attorney) are up-to-date and valid.
6. Develop a retirement funding plan that covers when you plan to retire and how much you will need to support your retirement lifestyle.
7. If you have children, develop a college funding plan to help cover higher education expenses.
8. Develop an overall investment plan with proper investment portfolio that supports your goals, while staying within your investment time horizon and risk tolerance.
All of these areas will help you develop your initial financial roadmap.
Finally, review your plan and progress periodically by giving yourself an annual check up to make sure you are staying on track. Life will throw you a curveball from time to time; divorce, a serious illness and an unexpected job loss can all affect your financial plan. So be prepared and be flexible.
How To Make Financial Planning Work For You
You are the focus of the financial planning process. To achieve the best results from your financial planning, you will need to be prepared to avoid some of the common mistakes by considering the following advice:
1. Set measurable financial goals.
Set specific targets of what you want to achieve and when you want to achieve results. For example, instead of saying you want to be "comfortable" when you retire or that you want your children to attend "good" schools, you need to quantify what "comfortable" and "good" mean so that you'll know when you've reached your goals.
2. Understand the effect of each financial decision.
Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child's education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated.
3. Re-evaluate your financial situation periodically.
Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals.
4. Start planning as soon as you can.
Don't delay your financial planning. People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.
5. Be realistic in your expectations.
Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results.
6. Realize that you are in charge.
If you're working with a financial planner, be sure you understand the financial planning process and what the planner should be doing. Provide the planner with all of the relevant information on your financial situation. Ask questions about the recommendations offered to you and play an active role in decision-making.
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance & Financial planning.
According to the Certified Financial Planner Board of Standard, financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement.
The financial planning process consists of six steps that help you take a "big picture" look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals.
The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans. As life and circumstance change, so your financial plan will need to be reviewed and revised on a regular basis:
Ensure you are on track to meet your goals
Identify and address new goals and
Make sure the financial tools you are employing still meet your needs.
Steps to the Financial Planning Process:
1. Identifying and setting short, intermediate and long-term goals. Ideally, each goal will have a date and dollar amount attached to it.
2. Evaluating your current situation - cashflow analysis and calculating your net worth. You need to honestly assess your current financial status, including positives and negatives.
3. Review your insurance coverage, including life, disability, home, auto, umbrella liability and long-term care.
4. Review your current tax situation to identify tax-saving opportunities and potential deductions.
5. Review your estate plan to ensure that your will, living will, healthcare power of attorney and other estate planning documents (revocable living trusts and durable power of attorney) are up-to-date and valid.
6. Develop a retirement funding plan that covers when you plan to retire and how much you will need to support your retirement lifestyle.
7. If you have children, develop a college funding plan to help cover higher education expenses.
8. Develop an overall investment plan with proper investment portfolio that supports your goals, while staying within your investment time horizon and risk tolerance.
All of these areas will help you develop your initial financial roadmap.
Finally, review your plan and progress periodically by giving yourself an annual check up to make sure you are staying on track. Life will throw you a curveball from time to time; divorce, a serious illness and an unexpected job loss can all affect your financial plan. So be prepared and be flexible.
How To Make Financial Planning Work For You
You are the focus of the financial planning process. To achieve the best results from your financial planning, you will need to be prepared to avoid some of the common mistakes by considering the following advice:
1. Set measurable financial goals.
Set specific targets of what you want to achieve and when you want to achieve results. For example, instead of saying you want to be "comfortable" when you retire or that you want your children to attend "good" schools, you need to quantify what "comfortable" and "good" mean so that you'll know when you've reached your goals.
2. Understand the effect of each financial decision.
Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child's education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated.
3. Re-evaluate your financial situation periodically.
Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals.
4. Start planning as soon as you can.
Don't delay your financial planning. People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.
5. Be realistic in your expectations.
Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results.
6. Realize that you are in charge.
If you're working with a financial planner, be sure you understand the financial planning process and what the planner should be doing. Provide the planner with all of the relevant information on your financial situation. Ask questions about the recommendations offered to you and play an active role in decision-making.
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance & Financial planning.
Tuesday, April 13, 2010
Dear All,
Saving money when you're young age is an important lesson. All good lessons and habits begin early, and saving is a skill that everyone needs. Many people adults included - do not have a good sense of saving for the long run. Besides being a great way to ensure you have enough money for your old age, saving money when you are young can only help your future.
I have been lucky to learn this lesson early because I have had a lawn business since young
Making sure you don't spend too much and continuing to save is a good way to accumulate wealth. I have put my earnings in a bank, and with investments and regular interest rates, have almost doubled my savings. Your money will double after twelve years at a modest rate of six percent interest. Many teens I know spend all the money they earn so it never has a chance to grow.
Teens should realize that now is a prime time to begin saving. In high school many parents pay for almost everything, so expenses can be small. If you have a job, you should have fun with some of the money. But you should also save some so that it will grow for you without your working, and begin planning for your future. When you spend money, you not only lose that money, but also the interest you could have accumulated by saving it.
After high school, college is expensive and then "real" life begins, with expenses such as food and rent. If you can hold onto a good portion of the money you earn as a teen, going to college and buying a house will be much easier. The earlier you begin saving, the more time the money has to grow.
If you are in your thirties without any savings, you will always have to play catch up. If you can just save $100 a month for five years at a ten percent interest rate, that money will be worth $7,750 in five years. After 25 years continuing to save $100 each month, your savings will be worth $132,000. These statistics show that the earlier you begin saving the easier it is to create a nest egg.
Later in life it can be hard to start saving because life is more expensive and you may only have enough to pay your bills. If you want to buy a house and have a family, you need capital, which comes from savings.
Many say money cannot make you happy (which is true), but money can help you lead a stable life.
Saving early will mean you will have to work fewer years when you are older and allow you to spend time doing things you want. You also want to be financially secure so you can live the way you want without worrying. Also, you will be able to retire at a reasonable age.
Think: if you have two million dollars capital when you retire, that money growing at a modest five percent annual interest rate will produce an income of $100,000 a year without you working an hour. That is without even mentioning the possibilities of wise investing in the stock market or mutual funds, where sometimes you can increase your capital by a hundred percent!
Life is full of surprise.
Contact me to inquire about Life insurance & Investment planning.
Saving money when you're young age is an important lesson. All good lessons and habits begin early, and saving is a skill that everyone needs. Many people adults included - do not have a good sense of saving for the long run. Besides being a great way to ensure you have enough money for your old age, saving money when you are young can only help your future.
I have been lucky to learn this lesson early because I have had a lawn business since young
Making sure you don't spend too much and continuing to save is a good way to accumulate wealth. I have put my earnings in a bank, and with investments and regular interest rates, have almost doubled my savings. Your money will double after twelve years at a modest rate of six percent interest. Many teens I know spend all the money they earn so it never has a chance to grow.
Teens should realize that now is a prime time to begin saving. In high school many parents pay for almost everything, so expenses can be small. If you have a job, you should have fun with some of the money. But you should also save some so that it will grow for you without your working, and begin planning for your future. When you spend money, you not only lose that money, but also the interest you could have accumulated by saving it.
After high school, college is expensive and then "real" life begins, with expenses such as food and rent. If you can hold onto a good portion of the money you earn as a teen, going to college and buying a house will be much easier. The earlier you begin saving, the more time the money has to grow.
If you are in your thirties without any savings, you will always have to play catch up. If you can just save $100 a month for five years at a ten percent interest rate, that money will be worth $7,750 in five years. After 25 years continuing to save $100 each month, your savings will be worth $132,000. These statistics show that the earlier you begin saving the easier it is to create a nest egg.
Later in life it can be hard to start saving because life is more expensive and you may only have enough to pay your bills. If you want to buy a house and have a family, you need capital, which comes from savings.
Many say money cannot make you happy (which is true), but money can help you lead a stable life.
Saving early will mean you will have to work fewer years when you are older and allow you to spend time doing things you want. You also want to be financially secure so you can live the way you want without worrying. Also, you will be able to retire at a reasonable age.
Think: if you have two million dollars capital when you retire, that money growing at a modest five percent annual interest rate will produce an income of $100,000 a year without you working an hour. That is without even mentioning the possibilities of wise investing in the stock market or mutual funds, where sometimes you can increase your capital by a hundred percent!
Life is full of surprise.
Contact me to inquire about Life insurance & Investment planning.
Monday, April 12, 2010
Critical Illness Dartboard- Must Read
Dear My All,
Let’s say God came into your dream tonight and convinced you that you are going down with one of the critical illness tomorrow.
Unfortunately after you woke up, you realized that God did not tell you which illnesses you are going to get, not a very good God, but at least He told you before hand, unlike your neighbor who had a stroke and went away just like that without a sen to claim from his insurance.
The next thing you did was to call up your insurance agent and told her to come into your house right away. While waiting for her, you continue to guess which illnesses God will strike you with today. You realized since there’s no way you can find out, you might as well cover yourself with as much protection as you can.
Finally, your agent arrives, and after telling her your premonitions, she immediately ask you to sign on the critical illness insurance application form, at the same time checking to see if you’d just went coo-coo (a contract signed with a non-sober person is not valid).
You deliberated for a while and asked quietly in your head, “What if God is playing a trick on me? If I used up all my money to top up my critical illness policy, and if it happens to be a trick God is playing with me, I would have no money to continue paying the policy next month!”?
Once again, you are stuck in a dilemma and you finally decided that the best way is to top up as much as you can financially afford while not having to make too much a change in your family’s existing lifestyle. Also, if God was serious, you have to make sure that your existing coverage would provide adequate fund for the following:
1) Expenses during your stay in the hospital.
2) 1-2 years expenses incurred by your household in the case of you not being able to work
3) Your boss is most likely going to give you “permanent leave”. How would that affect your existing cash flow, your loans and various other financial commitments.
4) Post-hospitalization treatment expenses. Don’t expect to be able to jump around and start kicking ass the minute you are out of the hospital.
It’s not called CRITICAL illness for no reason.
Chances are your post-hospitalization expenses might be as costly as your hospital bills.
Finally, after much deliberation, you topped up your critical illness policy to an amount you are comfortable with- one that can take care of your illnesses and family expenses (if God was serious), and one that wouldn’t tax you to the point you have to downgrade your lifestyle too much (if God was just kidding).
After all, you realized, with adequate critical illness coverage, you get better sleep at night, and even if God was kidding, your critical illness policy would still amount to quite a bit of savings when you decided to terminate it many years later.
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance planning.
Let’s say God came into your dream tonight and convinced you that you are going down with one of the critical illness tomorrow.
Unfortunately after you woke up, you realized that God did not tell you which illnesses you are going to get, not a very good God, but at least He told you before hand, unlike your neighbor who had a stroke and went away just like that without a sen to claim from his insurance.
The next thing you did was to call up your insurance agent and told her to come into your house right away. While waiting for her, you continue to guess which illnesses God will strike you with today. You realized since there’s no way you can find out, you might as well cover yourself with as much protection as you can.
Finally, your agent arrives, and after telling her your premonitions, she immediately ask you to sign on the critical illness insurance application form, at the same time checking to see if you’d just went coo-coo (a contract signed with a non-sober person is not valid).
You deliberated for a while and asked quietly in your head, “What if God is playing a trick on me? If I used up all my money to top up my critical illness policy, and if it happens to be a trick God is playing with me, I would have no money to continue paying the policy next month!”?
Once again, you are stuck in a dilemma and you finally decided that the best way is to top up as much as you can financially afford while not having to make too much a change in your family’s existing lifestyle. Also, if God was serious, you have to make sure that your existing coverage would provide adequate fund for the following:
1) Expenses during your stay in the hospital.
2) 1-2 years expenses incurred by your household in the case of you not being able to work
3) Your boss is most likely going to give you “permanent leave”. How would that affect your existing cash flow, your loans and various other financial commitments.
4) Post-hospitalization treatment expenses. Don’t expect to be able to jump around and start kicking ass the minute you are out of the hospital.
It’s not called CRITICAL illness for no reason.
Chances are your post-hospitalization expenses might be as costly as your hospital bills.
Finally, after much deliberation, you topped up your critical illness policy to an amount you are comfortable with- one that can take care of your illnesses and family expenses (if God was serious), and one that wouldn’t tax you to the point you have to downgrade your lifestyle too much (if God was just kidding).
After all, you realized, with adequate critical illness coverage, you get better sleep at night, and even if God was kidding, your critical illness policy would still amount to quite a bit of savings when you decided to terminate it many years later.
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance planning.
Sunday, April 11, 2010
Top 9 reason to buy life insurance
We spend money to buy something for the satisfaction of possessing it. But life insurance is a product we can’t see, can’t touch, and probably can’t enjoy it either in our lifetime. Why should we buy life insurance then?
1.Protect your wealth
This is the main reason people buy life insurance. Nobody likes to see his hard earned money all swept away in diseases related disaster. We work hard in our whole life to increase our economy value. There is no guarantee that we can enjoy a long life to realize our economy value. Only two things are certain: tax and death. When death arrive sooner that we thought, life insurance will be our wealth creation tool to instantly generate the cash we could have earned.
2.Show your love to your family
“We love because it’s the only true adventure.” – Nikki Giovanni
Love is indeed an adventure. Our life is an adventure too. It is full of risk. We can show our love in a thousand ways when we are still around. But when we die, how are we going to love our family? At least, life insurance can take care of our family’s financial well-being.
3.Show that you are a responsible person
Did you ever notice that most of the victims who died in road accidents didn’t buy life insurance? I can say most of them have none or buy only a tiny sum assured. An irresponsible person drives recklessly and carelessly almost all the time. If you are a responsible person, you will care for others. Certainly buying adequate life insurance shows that you are responsible and trustworthy to your spouse, your children, your parents and the one you love!
4.Our health is deteriorating everyday
Do you know anyone who is getting healthier everyday? By the time he is 100 years old, he is at the peak of his health condition. He can live on forever! Gosh, people are getting older and this is an undeniable and unstoppable fact. Our health is deteriorating every minute. We never know the exact time a disease will strike us. Fear of illnesses motivates people to buy life insurance.
5.Practice the habit of forced saving
When we face the shortage of cash, withdrawing money from our life insurance policy is always the last resort. In the fear of losing the life insurance policy, we are forced to make the regular premium payment. In the long term, life insurance is a great saving tool. It forces us to save for the future, and also for the unforeseen disaster.
6.Funding a trust
A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. People create maintenance trust to provide regular income for family. The cheapest way to fund a trust is using life insurance. The cost of premium is only a few percentage of the trust fund we intend to create. For instance, paying premium of $1000 annually is able to get a life insurance policy worth $100,000 for a person below age 30.
7.Funding a business operation
An employer takes out an insurance policy insuring against loss of profits arising from the death, sickness or injury of a key employee. The beneficiary is the employer. The life insurance policy bought is known as key-person insurance. The insurance payout will be used as emergency fund for business operations.
8.Funding Buy-sell agreement in partnership business or corporation
Every co-owned business needs a buy-sell agreement the moment the business is formed or as soon after that as possible. Every day that value is added to the business without a plan for future transition, it increases its financial risk. What happen if one of the partners decided or forced to exit the business? The most common triggering events are dispute, death, disability and retirement. Life insurance can be used to fund purchases of the deceased shares in the event of death.
9.Charity
A charitable trust is a trust established for charitable purposes. Charities may take the form of charitable trusts, companies or unincorporated associations. Some wealthy entrepreneur buys insurance to fund their charitable trust.
There are so many valid reasons you should buy a life insurance. If you don’t know how to determine whether your insurance coverage is adequate at this moment.
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance planning
1.Protect your wealth
This is the main reason people buy life insurance. Nobody likes to see his hard earned money all swept away in diseases related disaster. We work hard in our whole life to increase our economy value. There is no guarantee that we can enjoy a long life to realize our economy value. Only two things are certain: tax and death. When death arrive sooner that we thought, life insurance will be our wealth creation tool to instantly generate the cash we could have earned.
2.Show your love to your family
“We love because it’s the only true adventure.” – Nikki Giovanni
Love is indeed an adventure. Our life is an adventure too. It is full of risk. We can show our love in a thousand ways when we are still around. But when we die, how are we going to love our family? At least, life insurance can take care of our family’s financial well-being.
3.Show that you are a responsible person
Did you ever notice that most of the victims who died in road accidents didn’t buy life insurance? I can say most of them have none or buy only a tiny sum assured. An irresponsible person drives recklessly and carelessly almost all the time. If you are a responsible person, you will care for others. Certainly buying adequate life insurance shows that you are responsible and trustworthy to your spouse, your children, your parents and the one you love!
4.Our health is deteriorating everyday
Do you know anyone who is getting healthier everyday? By the time he is 100 years old, he is at the peak of his health condition. He can live on forever! Gosh, people are getting older and this is an undeniable and unstoppable fact. Our health is deteriorating every minute. We never know the exact time a disease will strike us. Fear of illnesses motivates people to buy life insurance.
5.Practice the habit of forced saving
When we face the shortage of cash, withdrawing money from our life insurance policy is always the last resort. In the fear of losing the life insurance policy, we are forced to make the regular premium payment. In the long term, life insurance is a great saving tool. It forces us to save for the future, and also for the unforeseen disaster.
6.Funding a trust
A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. People create maintenance trust to provide regular income for family. The cheapest way to fund a trust is using life insurance. The cost of premium is only a few percentage of the trust fund we intend to create. For instance, paying premium of $1000 annually is able to get a life insurance policy worth $100,000 for a person below age 30.
7.Funding a business operation
An employer takes out an insurance policy insuring against loss of profits arising from the death, sickness or injury of a key employee. The beneficiary is the employer. The life insurance policy bought is known as key-person insurance. The insurance payout will be used as emergency fund for business operations.
8.Funding Buy-sell agreement in partnership business or corporation
Every co-owned business needs a buy-sell agreement the moment the business is formed or as soon after that as possible. Every day that value is added to the business without a plan for future transition, it increases its financial risk. What happen if one of the partners decided or forced to exit the business? The most common triggering events are dispute, death, disability and retirement. Life insurance can be used to fund purchases of the deceased shares in the event of death.
9.Charity
A charitable trust is a trust established for charitable purposes. Charities may take the form of charitable trusts, companies or unincorporated associations. Some wealthy entrepreneur buys insurance to fund their charitable trust.
There are so many valid reasons you should buy a life insurance. If you don’t know how to determine whether your insurance coverage is adequate at this moment.
Please get insured immediately. Life is full of surprise.
Contact me to inquire about life insurance planning
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