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How much
coverage
is enough?

	Finally we have completed listing our assets and liabilities. Besides setting aside cash savings equivalent to 6 months of daddy's income for rainy days, we need to save for your education and make sure that there is enough money to cover our family's expenses in case daddy is not around anymore.
	Choy! It's not good to talk about such things, hubby!
	Well, that's what financial planning is all about, preparing for the unexpected, dear.
	Pa, how will we have enough to pay for everything?
	My dear brother, don't you know there is something called "Insurance" ?
	That's right girl. Through careful use of financial instruments such as insurance and investment funds, we will be able to meet our financial needs and goals.

How much coverage is enough?

Life insurance gives you and your family financial protection against death, permanent disability and critical illnesses.
The following are some common insurance plans:

WHOLE LIFE PLANS
With whole life insurance plans, you get lifelong protection as long as premiums are paid. Most whole life policies build up cash values which can be withdrawn in the form of a policy loan in case of an emergency. "Riders" to cover for illnesses and total permanent disability can be added to the basic plan.

ENDOWMENT PLANS
An endowment policy is aimed at building up your savings over a fixed policy term. The policy pays the sum assured and any bonuses you have built up at the end of the policy term, or when you die or become totally and permanently disabled during the policy term. Depending on your needs, an endowment policy can serve as an all-purpose savings plan, a children's education savings plan or a retirement plan.

TERM INSURANCE
With term insurance, you get protection for a fixed period. It pays the sum assured only if you die or become totally and permanently disabled during this period. Term insurance has no surrender value when the policy ends or terminates prematurely. However, the cost of this type of coverage is usually lower than that of a whole life plan. Term insurance usually comes in terms of 5 to 40 years and is renewable when each term ends.

INVESTMENT- LINKED INSURANCE PLANS (ILP)
Investment-linked insurance plans invest in different investment instruments while providing you with optional insurance coverage that you can vary according to your needs.

Getting Started – My Insurance Coverage

You can now calculate the coverage you need for your family income protection using the template here. More information on life insurance can be found in the MoneySENSE Guide "Your Guide to Life Insurance" (PDF, 59KB).

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