Published On: Fri, May 18th, 2018

Why Health Insurance Is Important In Financial Planning?

In the simplest terms, financial planning refers to the process with which you meet your life’s goals through proper management of your finances. In financial planning, you decide well in advance what your goals are, and you work in a systematic manner towards achieving them.

health insurance

There are several reasons why financial planning is important for your health, some of which are:

• It provides your goals with a direction. You can better understand your goals and dreams in terms of why you aim for these and how they can impact your life.
• When you utilize financial planning, you are better equipped to manage inflation. It also helps you in planning your budget in a more systematic manner.

It helps you ingrain better discipline with regards to money. You stop spending unnecessarily and have a better hold on your savings as well.

How to Do Financial Planning

There are several steps involved in proper financial planning.

Step 1: Where does your Money go?

The most important step in financial planning is developing a detailed budget that defines where your money goes right now. Carry a notebook around with you and just keep noting down your expenses.You can also download some app that lets you do the same.

Categorize your notes into categories, like transportation, food, clothes, etc.

Step 2: Decide Your Goals

When you plan some goals for the future, avoid generic ones, like “I want to be rich”. Instead go a bit into the specifics, like “I wish to own a house”, “My loans should be paid off”. Be realistic and specific.

Step 3: Check you Insurance Portfolio

Why insurance? Because in any form, insurance is a financial backup in case anything goes wrong. From home owner’s insurance to auto coverage, there are several insurance policies that you must have in place. One of the most important of these is health insurance. You may not own a home or a car to get it insured (even though third party motor insurance is mandatory by law), your health is still in your hands.

Step 4: The Credit Score

Credits scores and histories play a major role in the financial world.In fact, the majority of your financial transactions are associated with your credit score. Even if you don’t need to, it is a good idea to keep an eye on your credit score. Make sure that there are no errors in your records, and if you do notice something, get them fixed.

Step 5: Save

The key to saving a good amount of money is not your income, but your expenses.A very simple step to take here is to not save what is left after spending, but to spend what is left after saving. Look through your expenses and try to determine where you are spending too much. Look for ways to save here and there. You don’t need to remove all your guilty pleasures, but to control them.

Step 6: Build your Portfolio

After you have created a savings fund, look towards some investments. While mutual funds are one of the most popular avenues of investment, don’t be afraid to diversify your portfolio.

The Importance of Health Insurance Plans in Financial Planning

As mentioned before, investing in the right health insurance is highly important for proper financial planning. But, why?With the ever rising medical costs and the unpredictability of what may happen in the future, among all investments, family health insurance should top your list of priorities to help protect yourself from falling into a financial crunch at the first sight of illness. While this is true for almost any type of insurance, it is doubly true for a health insurance policy, for how are you supposed to achieveany financial goal if your health isn’t perfect. These days it is very easy to buy health insurance online, and so, one should definitely invest in it as early as possible in their life.

Here are some of the major financial benefits of having a health insurance policy:

Medical Expenses and Funds

If financial planning tells us anything, it is the fact that it takes a long time and quite a bit of hard work to be able to save a sizeable amount of money. However, a single medical emergency has the potential to squeeze everything out of your savings in a single instance.

Nothing is more important that your own life and health, but when medical emergencies happen suddenly, people find it quite hard to arrange the funds required for hospitalization or treatment. This is when you might find yourself turning towards loans or your savings, which can throw your entire financial planning out the window. However, with the rightfamily health insurance plan in place, tackling such situations is much easier.When you do choose a policy, make sure you choose an adequate coverage amount, taking into consideration your and your family’s health requirements.

Tax Benefits

Another financial benefit that both individual and family health insurance plans offer is tax management. The premiums that you pay to avail these insurance policies gives you the benefit of availing tax deductions under section 80D of the Income Tax Act. This can play a major role in your financial planning and savings.

Achieving Retirement Goals

What would happen to your carefully thought-out financial plan if you were to fall ill and had to exhaust your savings? As you near your retirement, such a situation can become a cause of concern for you. Health insurance on the other hand can protect you and your family from huge medical costs and help you in achieving your saving goals for your retirement.

Post-Retirement Treatments

Post retirement, you face a change in your financial capabilities, owing to the fact that you have a limited income. In such a situation, medical insurance can provide you with major backup for your medical treatments or hospitalization.

If the rising costs of healthcare are an indication, investing in health insurance at the earliest is a smart move. However, you must remember that health insurance is not a one-time thing; you have to pay attention to timely renewals if you want to be able to avail the numerous benefits of health insurance. A valid health cover will support you throughout your life, even after you retire. Just make sure that you choose a plan that can adequately provide for you and your family.

About the Author

- Paul Linus is an eminent online journalist who has been writing news, features and editorials on different websites from across the world for about a decade.

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