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What’s Your Policy When It Comes To Insurance?

What’s Your Policy When It Comes To Insurance?

 

We all know that insurance is important in life. But it really should be important for those things that would be disastrous if you lost them.

It’s worth knowing for every area of your life what your risk is: if my house burned down, would it be life changing? Well the answer, of course, would be yes. The same answer would apply if you were diagnosed with a terminal disease, or were involved in a life-changing accident …which is why life insurance and perhaps also disability insurance are also important things to cover.

Bu what if your washing machine broke down? Well of course that isn’t a life changing situation. And does your iPhone really need to be insured?

So when deciding on what items you should be insuring the above question is a great place to start.

Insurance  is the fourth component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

How many things are your currently paying insurance for that wouldn’t be a matter of life or death should things go wrong?

Insurance Is About Mitigating Risk

You have to decide as to how much risk you are prepared to take.

You either take the risk fully, you part-mitigate or you fully mitigate and insure everything.

When it comes to your life insurance, as you repay what you owe, your need for life cover diminishes – and you might be able to replace your cover at a lower cost.

That decision is for you to make, but realise that not everything should be insured, and it is here that you can use the money you have saved and put that to work harder for you.

And the simplest asset to build right at the very start is just simply to use very low-cost tracker funds, which costs almost nothing. Very low cost to start, and at least providing you with the feeling that you’re seeing something accumulating in your life.

And by the way, I talked in an earlier blog post about the importance of eliminating debt. It’s possible that while you’re eliminating debt, to reduce your insurance at the same time, so that you make your insurance fit your actual situation rather than assuming that the insurance you buy is set for the next 10, 15, or 20 years.

Are You Paying For Insurance You Were Not Even Aware Of?

As with the other components of D.E.B.I.T.S that combine to create your financial foundation, many of the same lessons from one area can be applied to another – which means that you can save time when ticking all of your items from your checklist.

For example, in my blog post about Bills I encouraged you to take out a highlighter pen and go through your utility statements to see how much you are paying, or to review online [much more common these days]. Well you can easily combine your insurance costs into this same exercise.

And by checking through the last 3-6 months of your online banking statements you may also spot occurrences of insurance which may have inadvertently been added on to purchases which you do not require.

Relevant Life Insurance For Business Owners

If you’re a business owner, and many of our clients are, did you realise it’s possible to get tax relief on that, too?

So the government is paying you to be insured, because they want you to be a responsible business owner. And that tax relief will reduce the premium. And if that reduces the premium, it puts more money in your account.

It’s called relevant life insurance, and if you would like further information to find out if this could apply to you then simply reach out to us and one of our team will be happy to help.

The key thing is to only insure things that are really important to you.

Kevin Whelan

Founder, WealthBuilders