Personal Financial Management Assignment-Insurance and Insurance Planning
An important component to personal finance is risk management. As stated in the text "understanding your insurance and insurance needs is important to determine the types, amount and coverage required to shield you from financial loss".
There are 2 components to this assignment.
1. Home and Auto Insurance.
Obtain a copy of your auto and homeowner's insurance. Read the policy to review. Once completed, answer the following questions:
For each of them, answer the following questions:
1. What does your policy cover?
2. What are the limitations to your policy?
3. Do you have options available in your policy that is not within it (e.g. income replacementetc?)
4. Based off the information you provided, how do you feel you can make your policy better?
5. What steps can you take to meet your insurance needs (e.g. change the deductible, add some riders?)
2. Health and Life Insurance.
Whether you are employed, self-employed - health and life insurance is a consideration that one will look into at one point of time in life.
The objective of the second component is pending on where it fits within your personal situation:
If you have health and life insurance (group coverage):
1. Obtain a copy of your benefits (group). What are you covered for?
2. What are the limitations to your policy?
3. If the policy has disability insurance - what are the definitions of your disability policy? How does that make you feel? What is the benefit amount that you are covered for? What is the start date of the benefit? What is the length of time (period) the coverage goes until?
4. Does the policy have critical illness? If so, what is covered and what are the limitations?
5. Complete a life insurance needs analysis. Incorporate your group benefits and any personal life insurance you have. Is this enough to meet your long-term needs? * Make sure you include your life insurance needs analysis.
Summarize in a paragraph at the end what you have identified, what you have learnt from this exercise and what you can do to make it better.
If you do not have group benefits:
1. Complete a life insurance needs analysis on yourself. Make sure you include it. After completion, review the different types of life insurance options (term, whole life, universal life). Based off what you have completed - which one do you feel is best for you? Why do you feel it's best for you? How does that meet your long term and short term needs?
2. Look up information on disability insurance. What definitions should you consider, and why? Why is disability insurance important? What does it do? How will it meet your long term and short term needs? What are the limitations to disability insurance
3. Look up information on critical illness insurance. What definitions should you consider, and why? What options do you like that critical illness offers? Why is critical illness important, and what does it do? Why do you feel it's best for you, and how does it meet your long term and short term needs?
The objective of the insurance exercise is to make you more aware of what you are covered for, and if it meets your needs. It will allow you to see if you should consider a change in coverage, increase in coverage and so forth. Most people do not review their insurance policies until something happens - and then it is too late.