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For anyone looking at their finances and beginning to think that they should be investing or saving for their future the often most overlooked part of the planning process is that of protection. It certainly is the least sexy, until you need it and it takes a bit more time and effort to get it right.

What exactly do I mean by protection? Well financial planning is broken up into three main areas as I see it and they are:

1. Wealth Creation – that is the creation of wealth through the process of investing or saving on a regular basis
2. Wealth Protection – the protection of that created wealth through effective management and investing of the funds to ensure they grow over and above inflation thus creating ‘real” growth rather than asset erosion.
3. Personal protection – for yourself and your family – the investment in insurance to protect you and your family from catastrophic and potentially disastrous events in the future.

Point 3 is the key focus of this article and in my mind is made up of several sub sectors:

a) Medical Insurance
b) Life Insurance
c) Permanent and Total disability
d) Critical illness
e) Income protection

Medical Insurance

It never ceases to amaze me that I still meet people who do not have medical insurance. Living in this part of the world medical care can be cheap and often people consider self insuring, this is all well and good until you find yourself in a hospital bed, ill and without the ability to work and possibly no income. Then suddenly medical insurance moves to the top of the list of things we “should have done”. If you want to self insure the small things then simply increase the excess or deductible which will reduce the annual premium BUT don’t go without, your health and wellbeing are the single most important asset you have and without it the rest is meaningless. There are hundreds of different providers for medical insurance and I would suggest speaking to your local broker or international financial advisor. Of course you could always call Infinity Insurance in Phnom Penh or Siem Riep and they would be more than happy to advise on a host of medical plans, both international and local,

Life Insurance

Life insurance is a vital part of financial planning as well and is something that those who have hope never to claim on just like those who don’t. It is important to ensure that should something happen to the main income earner in the family that the rest of the family can survive and continue on with their lives. The death of a loved one is both extremely sad and also puts extreme pressures on the surviving family, if you suddenly add to this huge financial stresses then it can become unbearable. Surely it is better to have the peace of mind of knowing that when that day comes your family can continue to be financially stable and your children can finish their education without worrying where the next pay check is coming from. A standard term assurance policy is something that is not prohibitively costly and whilst it can be a bit painful to set up, once it is running you are guaranteed that level of cover as long as you pay the premiums.

In addition to your life cover and usually as a rider to the plan one can add Permanent and Total Disability which would pay out in the event of injury causing you permanent and total disability. The exact features of cover are very dependant on the individual policies. Availability of Permanent and Total Disability is also dependant on your country of residence and in countries such as Cambodia can be very hard to find.

Another rider or sometimes seen as a stand alone policy is Critical Illness cover that provides a lump sum pay out in the event of a critical illness. This is limited to a very well defined list of illnesses including heart attacks and cancers but each policy may be slightly different. Again there are difficulties in finding policies that will cover residents of countries such as Cambodia currently.

Finally, one of the biggest threats to us all is the threat of illness or injury that prevents us from working and earning an income. A simple income protection plan would ensure that at least 75% of your income is protected against injury that prevents you from returning to work.

Whilst this topic is neither pleasant nor exciting to read, it is most definitely an important one and I urge you to take a moment, sit down and think about what protection you have, if any, and whether it is sufficient and then to take some action!

Trevor Keidan wrote this post.

Trevor is Infinity's Managing Director and Chief Executive and resides in Hong Kong.

View Trevor Keidan's profile page.