PHOTO: PIXABAY
Article by Kanokporn Asawayonchai, CFP® Financial Planner
Thai Financial Planners Association
November 7, 2023
Throughout a person’s life, there are certain inevitable realities such as birth, old age, illness, and death. When we are born, we rely on our parents to take care of us, providing for our expenses such as food, school fees, and medical costs. As we grow older and start working, it becomes our responsibility to take care of our parents. However, if we plan well for retirement, we may not have to rely on our children for financial support. This is particularly important for those who choose to remain single.
For individuals in retirement with children to look after, there may not be a significant problem. However, for those who are determined to stay single, it becomes crucial to consider greater risk management in various aspects. These include:
1. Short lifespan: There is a risk of sudden death, such as from accidents or acute diseases. In such cases, it is important to think about who will be affected by the loss and who will need care. It is also essential to understand the definitions and policies surrounding permanent total disability to manage this risk effectively.
2. Serious illnesses: Serious diseases can be financially draining, requiring a substantial amount of money for treatment. Moreover, these illnesses often lead to a loss of income during and after the treatment process. It is crucial to be aware of the various types of serious illnesses and their potential impact on income and expenses.
3. Long lifespan: Retirement marks the end of the working life, but expenses continue to exist. It is essential to plan for the source of money during retirement and also consider the potential medical expenses and decline in overall health during older age.
To effectively manage these risks, it is crucial to think ahead and plan for various scenarios. By considering comprehensive risk management strategies, individuals can ensure financial security and maintain a good quality of life throughout their lives.
Note: The figures provided in the original text are financial calculations specific to the Thai context and have not been included in this paraphrase.
PHOTO : PIXABAY Article by “Kanokporn Asawayonchai” Financial Planner CFP® Thai Financial Planners Association
November 7, 2023, during a person’s life There is no escape from the reality of birth, old age, illness, and death, When you are born, you have someone to look after you, that is, your parents who look after you until the grow up Take care of expenses, be it food, school fees, medical expenses. After graduation I had a job. With your own income, it’s time for your children to look after you. But if you are well prepared for retirement, you don’t have to rely on your children for child support.
For those in retirement with children to look after, there may not be a problem. But for those who are determined to remain single for the rest of their lives. Greater risk management may need to be considered in each matter as follows.
1. Life span is not long.
non-long After a short period, death occurs, for example from an accident. from acute disease
Thought provoking issue: Is there anyone affected by the sudden death, like a parent, that we need to care for?
Permanent total disability with definitions to explain risk management in this area, namely not being able to carry out 3 out of 6 daily activities for at least 180 days, not being able to work, receiving compensation, loss or disability. From injury or illness 1. The ability to move
2. The ability to walk or move
3. The ability to wear
4. The ability to bathe and clean the body
5. The ability to eat food
6. The ability to excrete
1. Loss of sight in both eyes
2. Loss of 2 hands, 2 feet, or 1 hand and 1 foot.
3. Loss of sight in one eye and one hand or loss of sight in one eye and one foot.
Things to consider: More impactful than leaving is the fact that income earners who used to support the family are unable to work to earn income. It is also a burden on the family to take care of him.
Serious diseases Serious diseases are diseases that require a large amount of money to treat. At the end of the hospital treatment process, life is affected that will never return to the way it was before. Refers to high costs during treatment Income lost during and after treatment
A definition to explain this aspect of risk management is
Group of serious diseases, serious diseases such as 1. Cancer and tumor group Metastatic cancer and non-cancerous brain tumors 2. Diseases of the heart, respiratory system and blood circulation. heart muscle Blood vessels that supply the heart muscle, the heart valves, and the aorta. pressure in arteries Bronchopulmonary obstruction Anemia of the bone marrow not producing blood 3. Nervous system and muscle stroke group Brain haemorrhage, obstruction, aneurysm, Alzheimer’s disease viral encephalitis Bacterial meningitis, Parkinson’s, paralysis of the muscles in the extremities, polio , muscular dystrophy 4. A group of diseases of important bodily organs and functions, liver failure, chronic kidney failure. Severe ulcerative colitis organ transplant Severe form of rheumatoid arthritis 5. Group of diseases, sepsis, serious injury and disability Third degree burns, severe head injury, blindness, total permanent disability.
Things to think about: Imagine if you had cancer. Treatment usually involves chemotherapy, which means time off work. After chemotherapy, the body will be weak and have to be careful of infection, so it will not be able to return to normal work. affect work Affects income, affects expenses after treatment is complete. You must adjust your life. Income is often less or non-existent.
2. Long life span
Retirement is the end of working life. is the body unfavorable Company regulations regarding the retirement age of employees There is a new wave to replace the old wave.
Things to consider: When income stops But expenses don’t. Where will the source of money for retirement come from?
Illness after retirement, the body deteriorates Whether it’s osteoarthritis, blurred vision, cataracts, Alzheimer’s disease. Money is needed to maintain a good quality of life when the body declines.
Things to think about: After retirement, in case of common illness Chronic illness Where can I get treatment for a serious illness? From what source does this cost come?
Thinking ahead about upcoming events enables us to cope well. Don’t panic if it actually happens. Therefore, we invite you to think about different things.
Comprehensive risk management
Life span is not long, death, family expenses for parents 240,000 baht per year, length of coverage (Parents life expectancy – current age) 20 years Inflation to maintain quality of life with the same paying power 3% Expected return on investment 3% Protection that should be provided in the event of death (1) 4,800,000 baht, available deducted assets and compensation
1. Current value assets
2. Life insurance available
3. Social security compensation in the event of death
Total assets currently available (2)
1,000,000
700,000
90,000
1,790,000
baht
baht
baht
baht
The amount of insurance funds that should be increased (1) – (2) 3,010,000 baht
Total permanent disability Total permanent disability is different from cause of death in that we have no income but we still have to take care of dependents and daily expenses. Also medical expenses Security you should have in case you die (No more income) (1) 4,800,000 baht personal expenses in case of disability
Carer’s salary
Medical expenses
Including disability costs
60,000
180,000
60,000
300,000
baht per year
baht per year
baht per year
baht per year
Period of need for provision (expected life expectancy – current age) 40 years Inflation to maintain quality of life with the same paying power 3 % Expected return on investment 3 % Coverage that should be provided for disability only (3) 12,000,000 baht Provision should disability being (1) + (3) 16,800,000 baht, deducting current assets and compensation.
1. Current value assets
2. Current disability insurance
3. Social security money in case of disability (calculated as present value)
Total assets currently available (2)
1,000,000
2,000,000
2,080,329
4,080,329
baht
baht
baht
baht
Amount of disability coverage that should be increased (1) + (3) – (2) 12,719,671 baht
Note: There are no outstanding debts.
Critical Illness Risk management in the case of critical illness is assessed on the basis of predictions. The possibility of serious diseases occurring due to the environment or heredity, most commonly cancer. and cannot return to work yet
Coverage calculation is as follows:
Protection for virtual death (To take care of dependents) All outstanding debts, be it house debt, unpaid car debt, should be fully paid Medical expenses in excess of general treatment costs Prepare 3,000,000 baht in case you are unable to work after treatment. Calculate as in the case of disability.
long life span
Retirement: In order to manage risks in the case of longevity and have money to use after retirement, you should know the following information:
1. What is the present value of the money used for eating each month?
2. Retirement age and life expectancy
An example case is the current age 41 years, retirement age 60 years, life expectancy 85 years, daily living expenses 15,000 baht per month, currently there is no investment for retirement at all. Since the expected return is 6%, you must invest 40,000 baht per month.
Illness: Risk management in the case of long life where illness is probably unavoidable. The factors that should be calculated are as follows:
1. How much is the post-retirement health insurance premium that must be paid each year? A source of funds for the payment of such health insurance premiums should be established.
2. The money for paying for treatment after the health insurance ends is also the same.
Single people are different in that they don’t have children or a spouse. But you still have yourself and your parents to look after. If life is not long, one should prepare for death, disability or serious illness. This causes yourself and your parents to be affected by their well-being.
Or in the case of a long life, you should prepare money for retirement, be it living expenses. Medical expenses for general diseases Chronic diseases, including serious diseases, living single, life can be good when you have prepared yourself to cover all risks.
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