A proper insurance cover is one of the undervalued methods of building wealth. Certain insurance policies offer incredible tax benefits and versatility that make them more than just an income replacement tool. When you carefully choose the right insurance cover, not only are you protecting the wealth you have worked hard to build, but you can also build it further.
Do you really need insurance?
Your greatest asset is your ability to earn an income. When you protect your source of income, you will have the peace of mind to work harder, thus growing your wealth. That is why forward-thinking businesses don’t take their business insurance cover for granted.
Whether you are an investor, business owner or salary earner, having the right insurance can put you on the wealth creation ladder. If you are interested in building wealth, then consider the following areas of insurance:
Life insurance
There are two main types of life insurance–term insurance and permanent insurance. Term or temporary insurance ranges between 10 and 30 years with an option for renewal. Business owners who intend to retire in twenty years can buy a 20-year term plan. Permanent insurance covers for a lifetime besides providing a death benefit. This insurance will come in handy when you need a business loan, as the lender will want to be sure their interests are protected in the event of sudden death.
Benefits insurance
This insurance covers critical illness, disability, and long-term care insurance. Caring for health situations like these is expensive. Health insurance takes care of the expenses associated with long-term care, critical illness, and disabilities. It is never a good idea to wait until retirement before considering how you will fund the cost of healthcare. Investing in the proper insurance cover is a good idea if you want to leave your wealth intact.
Business Insurance
This will only apply to those who own a business but is worth repeating as the importance of business insurance is no less vital than anything else mentioned in this article as it is connected to your livelihood and income. The last few years has seen a rise in entrepreneurs becoming involved in retail businesses, so having some form of retail insurance is vital for the safety of your enterprise.
Annuities
Annuities are sometimes considered to be the opposite of life insurance because they prevent you from outliving your savings. With an annuity, you pay the insurer an upfront premium which is then pooled with other funds to create an investment pool from where you get regular payments based on your premium and the guaranteed interest rate. With lifetime annuities, you get an income for life and a beneficiary income for life after your death. Fixed term annuities give you an income for a set period. An annuity is a great way to get extra income that would add to your existing wealth.
In all aspects of life, there are different risks that we expose ourselves to. While it’s impossible to know what the future holds, having the right type of insurance will protect you financially.
