If you figure your insurance needs are well taken care of just because you have life insurance cover in the event of an untimely death, then think again. There is more to it than that, and you first need a deeper understanding of the risks you face.

Life insurance might insure you against uncertainty and death for as long as you pay the premiums, but how many of us know how to make good use of other products like term insurance and insurance-linked products (ILPs) as well?

You might need coverage in the event that you suffer from a disability, a critical illness, or are hospitalised, because illnesses like heart attacks or cancer can severely affect a person’s income-generating ability and current financial position. If you were hospitalised tomorrow, could you afford the treatment?

Term insurance products, meanwhile, provide coverage for a stated, defined period. When the term ends, so does your cover, but such an approach can be useful for businesses, high-net-worth individuals and young families looking for maximum coverage at minimum cost.

A personal financial plan divides into three parts – accumulation, conservation and, ultimately, distribution – and life insurance can play a big part in all three. Rather than have your kids look after you in your retirement, for example, why not think about using insurance to help you leave a legacy? There are even investment-linked products (ILPs) that combine insurance cover with potential investment returns by investing your premiums in unit trusts.

But whatever combination you choose, the most important thing is for you to first invest time in the planning process. After all, it’s your family, or your business, and it’s your plan.

THIS ARTICLE IS REPRODUCED COURTESY OF SMART INVESTOR MAGAZINE