Family Protection It is better to make your family insurance plan 2024-2025
Diseases and accidents are inevitable in a person’s life, but the occurrence of risks does not mean the end of a family’s financial expenditure.
If an accident unfortunately happens, the hungry children still need long-term care expenses, the aging parents need continuous financial support, and the mortgage and car loans that have not been paid off still need to be paid monthly. Risk planning in advance is a must for every family.
Insurance Family Support
Insurance is a financial tool that helps families transfer the extreme risks they may encounter. When a major crisis occurs, it can provide financial support without affecting the family’s normal life. Insurance cannot guarantee that the family’s wealth will not shrink.
The preservation and appreciation of family wealth require investment tools, but insurance can prevent people from falling into poverty. The family’s long-term allocation account should combine insurance and investment tools to make good plans.
100% Protection
The protection mechanism provided by insurance is the only tool to provide timely assistance regarding system design.
Even if an insurance company goes bankrupt, under the current regulatory and legal framework, life insurance still provides 100% protection for the legitimate rights and interests of the insured and beneficiaries, and non-life insurance can also provide full protection under normal circumstances. So, what risks will each of us and our families face, and how can we transfer them through insurance?
Develop a comprehensive family risk protection plan
Before formulating an insurance plan, we need to sort out the sources of risk in family life comprehensively. Commercial insurance offers coverage for nearly every facet of life. Based on the family’s specific situation, we can rationally sort out the sources of risk that need to be avoided, rank the importance of different risk sources, and calculate the amount of financial support required when risks occur. The problem of insurance planning will be solved.
Specifically, the various risks people encounter in their lives, as well as the safety margins and insurance protection tools needed behind the risks, are listed below.
| Risk management objectives | Insurance tools | Extreme risk types | Protection | Safety margin |
| Active income management | Term Life Insurance | Loss of income due to death / disability within a certain period of time | Single-engine family liability protection
Debt protection for loan borrowers |
5~10 times of annual household income |
| Whole life insurance | Loss of income due to death / disability over lifetime | Single-engine family liability protection
Suitable protection tool for middle- and high-income people |
More than 5 times the annual household income | |
| Critical Illness Insurance | Loss of income due to serious illness | Compensation for loss of income
Rehabilitation treatment fee supplement Smooth transition and safe treatment |
3~5 times of annual household income | |
| Accident Insurance | Loss of income due to death / disability caused by accidental injury | Income supplement after accidental serious injury
Smooth transition of family life quality |
High leverage ratio, accidental death partial insurance liability and life insurance overlap | |
| Passive Spend Management | Medical Insurance | Medical expenses incurred in outpatient and hospitalization | Reimbursement of outpatient and hospitalization expenses
High-end includes additional medical resources |
Determined based on existing medical insurance, family income and medical needs |
| Property damage insurance | Property loss due to risks such as fire, natural disasters, theft, etc. | Compensation for loss of valuable property | High leverage ratio, family property insurance premium of tens of millions of yuan | |
| Future long-term cash flow management | Pension annuity and other annuity insurance | “No one to rely on and no one to support the elderly” in the context of longevity | Smoothing cash flow before and after retirement
Supplement of basic pension |
Determined based on future spending needs, taking into account current and expected financial conditions |
| Children’s Education Fund | Insufficient funds for children’s education | Securely lock in education expenses
Immunity protection mechanism |
Combined with children’s education plan |
* The safety margin is indicative only. The specific amount of insurance coverage should be determined based on the financial situation of the insured’s family.
Life insurance:
For the mainstay of the family income, the insurance liability of life insurance can ensure that in extreme cases, the cost of raising children during their growth can still be paid, the outstanding mortgages and car loans can still be paid off, and the financial expenditure for supporting parents can still be sustained.
Life insurance has term and whole life insurance according to the different protection periods.
Families with average income or who want to take advantage of the high leverage characteristics of term life insurance can use the low premium of term life insurance to insure a higher amount. The leverage ratio of whole life insurance is not as high as that of term life insurance, but it has a higher cash value and is suitable for middle- and high-income people.
Life insurance is usually set at 5 to 10 times or more of the insured’s annual income. It is also necessary to consider whether it can cover the family’s future expenses and debts. At the same time, it is also necessary to combine the impact of premiums on family cash flow to make judgments so that the payment of premiums will not affect the family’s normal cash flow expenses.
Critical illness insurance:
Critical illness insurance can pay insurance money to the insured when suffering from a major disease or undergoing an agreed operation. It is an important tool for compensating income loss when the disease occurs.
Critical illness insurance can be divided into lifetime, fixed-term, and one-year insurance per the coverage period. If the payment ability is sufficient, the lifetime product should be preferred to provide lifetime coverage when available.
Given limited economic conditions, the family’s breadwinner can be insured first, and other family members and adults can be insured first.
Then, children can avoid economic damage under risk events. If the economy is sufficient, purchasing critical illness insurance for each family member is best. Regarding the discretionary amount of insurance, critical illness is accompanied by high medical expenses and a subsequent recovery period.
Not only can the previous stable work income not be maintained during the treatment period, but also, for the sake of health after recovery, the lifestyle needs to be adjusted in the next few years, and the work intensity should not be maintained at the previous level.
Therefore, critical illness insurance coverage can generally be set at 3 to 5 times the annual income to cover the loss during treatment and recovery.
Accident insurance:
When the insured suffers an accidental injury, the insurance money can be paid to the insured or the beneficiary. In addition to the basic death/disability insurance, some products include medical expenses and hospitalization allowances.
Regarding the protection period of accident insurance, most products are short-term ( 1 year), and long-term accident insurance is usually a return type. It has guaranteed renewal and savings characteristics compared to short-term accident insurance, and the rate level is also higher than that of short-term accident insurance.
However, because of its savings nature, short-term accident insurance with high leverage is preferred when only the protection function of accident insurance is needed.
Medical insurance:
Usually a short-term ( 1-year) product with reimbursement. The premium rate will increase when the policy is renewed; most do not guarantee renewal. Low-end products such as the “million medical insurance” products on the market have a maximum coverage of 1 million yuan.
Still, the reimbursement scope is narrow, and the deductible is high. Generally, the hospitalization expenses above the deductible (such as 10,000 yuan) are reimbursed at a certain ratio.
This type of medical insurance is relatively low, and the premium rate for a 30- 30-year-old is about 300 yuan. Mid-range medical products generally add reimbursement for special needs and international departments, but the price is 3 to 5 times that of low-end products.
High-end medical insurance covers millions or even tens of millions, and the hospital list and special needs departments, international departments, and private institutions are comprehensive. There is usually a direct payment mechanism, but the premium of high-end medical insurance is high, and the annual premium is usually tens of thousands of yuan.
Therefore, the choice of medical insurance is highly related to the individual’s demand for medical resources.
Property damage insurance:
Real estate is worth hundreds of millions, and forgetting to turn off the fire once may cause considerable losses. The protection ratio of household property insurance is high.
The annual premium of household property insurance with a coverage of tens of millions is only a few hundred yuan, which can protect the important property of the family.
Customers, such as famous paintings, porcelain, and other artworks worth tens of millions, also cherish various valuable items. In addition to careful care, institutional protection arrangements are also needed.
Annuity insurance:
life insurance with savings and investment functions. The insured pays the premium once or regularly. The insurance company pays the insurance money according to the agreed time and method, subject to the survival of the insured until the insured dies or the insurance contract expires.
According to the insurance payment arrangement, it can be divided into pension annuity insurance, education annuity insurance, and other types with savings and investment functions. The insured amount should be determined based on future expenditure needs and current financial conditions.
It is better to make an insurance plan early rather than late. Early insurance will cost less, provide early protection, and provide more options.
The earlier the insured purchases insurance, the less premium they need to pay.
For example, the premium rate for a whole life insurance policy with the same coverage at 20 is only about 1/2 of that at 40 and about 1/3 at 55. The earlier you purchase insurance, the earlier the insured can get protection.
Readmore Health Insurance vs Medical Insurance
Especially for lifetime protection, the earlier you purchase insurance, the longer the protection period. The earlier you purchase insurance, the more options the insured has. Most insurance policies have age restrictions when the insured purchases insurance.
In addition, insurance policies with high coverage usually require physical examinations. The later you purchase insurance, the more likely you are to fail to meet the “three highs” and other indicators, thus limiting your insurance options.
Therefore, if consumers can use insurance to protect against risks as early as possible, the cost will be lower, the protection period will be longer, and they will have ample room to choose products on the market.
Choose a professional organization to develop a complete family protection plan for you.
Faced with thousands of insurance products on sale from dozens of insurance companies in the market, especially with a wide variety of product types and different terms, consumers may need clarification on professional terms.
Therefore, a more convenient way is to leave the formulation of family protection plans to professional institutions.
Professional institutions can rely on rich industry resources and experience, research systems, and professional knowledge to carefully select the dazzling array of insurance products on the market. At the same time, from the customers’ perspective, insurance protection plans can be part of family wealth planning.
According to customers’ specific wealth status and family protection needs, customized family wealth and risk management plans can be provided, the corresponding risk coverage can be reasonably determined, and family insurance plans can be designed.
Planning can also be carried out for asset isolation and inheritance needs to achieve comprehensive protection arrangements for family risks.