Topic: Planning
25 posts tagged “Planning”.
Review Your Cover When Life Changes
Insurance is not a buy-and-forget purchase. The right amount of cover moves with your life, and a few predictable events are the moments to check it — up or down.
Lapsing and Surrender: The Hidden Cost of Quitting Early
Whole-life and investment-linked policies are built to be held for decades. Give one up in the early years and you often get back far less than you paid — a cost few people see when they buy.
Mis-Selling: Warning Signs to Watch For
Most insurance advisers are professional and helpful. But a few sales tactics are reliable warning signs that a product is being pushed for the seller's benefit rather than yours. Learn to spot them.
Start With the Risk, Not the Product
Good insurance decisions run in one direction — name the risk, size the need, then choose a product. Reverse that order and you end up owning policies that answer no real question.
Term vs Whole Life: The Core Trade-Off
Almost every life-insurance decision starts with one fork: pure, cheap protection for a set period, or lifelong cover that also builds a cash value. Knowing what each is for settles most of the question.
Critical Illness Cover: Early-Stage vs Late-Stage
Critical-illness insurance pays a lump sum on a major diagnosis — but when it pays depends on whether you hold early-stage or late-stage cover. The difference matters both for claims and for cost.
Income Protection: Insuring Your Pay Cheque
Your ability to earn is probably your largest asset — yet it is the one most people leave uninsured. Income-protection cover replaces a share of your pay if illness or injury stops you working.
Who Actually Needs Life Cover?
Life insurance is not for you — it is for the people who would suffer financially if your income vanished. That single test tells most people whether they need it, and roughly how much.
How Long Should Your Cover Last?
The right length of life cover is the length of the need behind it. For most people that need is large now and shrinks over time — which has real consequences for what you should buy.
Universal Life: The Flexible Lifelong Policy
Universal life is a third shape of cover, sitting beside term and whole life. It offers lifelong protection with adjustable premiums and a cash value tied to interest — useful for some, but more complex and usually aimed at estate planning.
How Much Life Cover? Replace the Income
The oldest and clearest way to size life cover is to treat your future earnings as an asset and insure it. The idea is a century old — Solomon Huebner called it your "Human Life Value."
The DIME Method: A Quick Way to Size Cover
If "income times years" feels too loose, the DIME method gives you a fuller checklist — adding up Debt, Income, Mortgage and Education to reach a cover figure you can defend.
"Buy Term and Invest the Difference"
A long-running piece of advice says to buy cheap term cover and invest the money you save versus a whole-life policy. It is often sound — but it rests on one condition many people miss.
Laddering: Match Cover to a Falling Need
Because your need for cover shrinks over time, you rarely need one big policy for thirty years. Stacking several shorter policies — laddering — matches the cover to the need and trims the premium.
Over-Insurance: Paying for Cover You Don't Need
Being under-insured is the obvious danger. But over-insurance is a quieter, more common drain — premiums spent on cover that duplicates what you have, or insures risks you could easily absorb.
Investment-Linked Policies: How They Work
Investment-linked policies promise protection and investment in one product. Understanding where the money goes — and what it costs — explains why many advisers favour keeping the two jobs separate.
Why Bundling Insurance With Investing Usually Costs More
The deeper lesson behind investment-linked and whole-life policies is a general one: combining protection and investing in a single product almost always costs more than buying the parts separately.
Margin of Safety: The Right Tool for Each Outcome
Insurance is one expression of a deeper idea — leaving room for error. But no single tool covers every outcome. A sound plan layers insurance, cash, bonds and equities, each handling a different part of an unpredictable future.
Why Smart People Buy Bad Insurance
The mistakes people make with insurance are remarkably consistent — and they trace back to how the human mind handles risk. The work of Daniel Kahneman and Amos Tversky explains most of them.
Why a Plan Beats No Plan — Even When It Changes
No budget survives contact with real life unchanged — and that is not a reason to skip planning. A plan you adjust as you go still beats drifting with no plan at all, because it gives you a baseline to steer from when things go sideways.
How Big Should Your Buffer Be?
"Three to six months of expenses" is the standard answer, but the right size depends on you. The more variable your income and the more people who depend on it, the bigger the cushion you need. Here is how to size yours rather than borrow a generic number.
The Three Real Risks
In retirement the danger is not day-to-day market wobble. It is inflation eroding spending power, longevity outliving the pot, and sequence-of-returns — a bad run early on. Name the real enemies and you can plan for them.
The Liquidity Ladder
Liquidity is how quickly you can turn an asset into spendable cash without loss. A ladder arranges your money by when you will need it — cash for now, growth for later — so a market fall never forces a bad sale, and inflation never erodes years of idle cash.
Purpose Before Portfolio
An endowment knows what it must pay for, and when, before it builds a portfolio. A retirement pot has three jobs at once — essentials, lifestyle, and legacy — each with its own horizon and risk tolerance. Name the jobs first; the portfolio follows.
Putting It All Together: A Retirement Framework
The whole pillar in one place. A simple, ordered framework that turns the individual ideas — purpose, the asset mix, low-cost investing, drawing down, and a secure income floor — into one cohesive plan you can follow from your working years into retirement.