Ways to prepare for the unexpected
Life is full of events we plan for and look forward to, like leaving home, starting work or getting married. But sometimes events happen that can’t be predicted and may not be so welcome – like changes to your health, wealth or working conditions.
7 May 2011
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It’s important to take some time to plan, so if the unexpected does occur, you and your family will be looked after.
Think about what you need to protect and the level of risk you’re willing to take. A sensible first step is to consider what is important to you and do a stock-take of your most valuable assets. These might be your home, family, health or career, or for many, it’s a combination of these things.
The next step is to think about how you can protect these things. Insurance is one option and there are some types of insurance you are required to have, like house insurance if you have a mortgage. And if you own a car, it’s wise to have at least third party car insurance so you’re covered if you damage someone else’s car.
There are other ways to manage the risk that you may wish to consider – especially if other insurances are beyond your budget. Having access to an emergency fund is a good start. For some, that might mean setting aside three months of income to draw on if the unexpected happens. It might take time to build up – but it’s a good goal to have. For others an emergency fund may be having access to credit, equity in their home or an arrangement with family to support them.
If you have insurance it’s important to check it’s up-to-date and takes into account any changes to your circumstances. You may no longer need certain insurances or you may decide that what’s important to you has changed.
Buy insurance that protects what’s important to you and only buy what you need – it’s easy to buy too much insurance but it’s just as easy to buy too little.
Even though it’s not pleasant to think about what might happen, the more prepared you are the better off you’ll be.