In this part 3, I am revealing the other top financial planning mistakes by not having enough insurance or life cover as per the living standard of the person. An important step to your financial plan, one should consider adequate life cover considering living standard of self and family.
If your living standard is high, then your life cover also should be high for your family to maintain present living standard in case of any incident happening to your life.
Living without life insurance is just like “flying without a net”. Any financial planning without consideration and action for adequate life cover is painful. The major goal of a perfect financial plan is to maintain the life style of yourself and family all the time if you are with them or not.
A common error found in this area is, people generally selecting traditional life insurance policies such as endowment plans or money back policies to save tax or investment purpose. Remember, returns from such policies are very less compare with any other investment products such as stocks, mutual funds, gold or real estate. Also, such returns will not be able to beat the inflation due to its limited return rate.
The best advise is, protect yourself with cheap term policies providing huge life covers along with applying family floater mediclaim or health insurance policies for self and family members. The thumb rule for your life cover is your annual income multiplied by 10.
Always insure yourself with adequate life cover, that will be able to provide your family to maintain the life standard.
This is Part 4 in a series on Top personal financial planning mistakes. The full series is Part 1, Part 2, Part 3, Part 4, Part 5 and Part 6