01/03/2022
Estate Planning - Part 1: Introduction and Wealth Protection
In order to truly appreciate the art of Estate Planning we first have to understand the hierarchy of Wealth. For this purpose let me introduce to you the, Wealth Pyramid (see pic).
The Wealth Pyramid is divided into 3 different parts:
1. Wealth Protection
2. Wealth Accumulation; and
3. Wealth Distribution
At the very bottom we have Wealth Protection, this is the largest portion of the pyramid and the most important part. Why? Well, imagine you are building a pyramid using Lego and one or two pieces of come loose at the bottom of your pyramid will it still stand tall? No! Precisely! The bottom of the pyramid is the foundation and so is Wealth Protection. If your foundation falls apart you will no longer have wealth to accumulate nor distribute.
So, what is Wealth Protection? Wealth Protection is basically Insurance. Do you know that there are 5 different kinds of Insurance cover and each one of them serve a different purpose? Let us take a quick look at the 5 Insurance cover that make up Wealth Protection:
1. Hospital and Surgical Cover: This is your medical card for reimbursement of claims (up to the limit of your coverage paid) for any medical attention required where hospitalisation or surgery is needed.
2. Critical Illness Cover: This is a one time payment to you (up to the limit of your coverage paid) if you are diagnosed with a critical illness. Insurance companies typically have 30 - 40+ critical illnesses that are covered i.e. Cancer, Heart Attack, Stroke etc.
3. Total Permanent Disability Cover: This is a one time payment to you (up to the limit of your coverage) if you are diagnosed as permanently disabled.
4. Personal Accident Cover: This is a one time payment to you (up to the limit of your coverage) if you are met with an accident.
5. Life Cover: This is also a one time payment to your family (up to the limit of your coverage) should you pass on .
Hence, only when you are properly covered under each of these Insurance elements it is safe to say that you have a stable Wealth Pyramid. Having only a Life Cover or one of the other cover will force you to reach in to your Wealth Accumulation (savings) coffers should any eventualities happen.
Now, look back at your own portfolio of insurance products, do you have all of these 5 products? If yes, are you sufficiently covered vis-a-vis your earnings (salary)?
Do you need an unbiased advise on your Wealth Protection portfolio?
Talk to me today.
Yours truly,
Yasmeen Miira Yasmeen