Family Insurance Planning: How to Scientifically Allocate Coverage for Your Household?

1. Core Principles of Family Insurance Allocation

1.1 Protection Hierarchy: Foundation Before Enhancement

• Essential coverage first: Medical, accident, critical illness, and life insurance.

• Enhanced coverage later: Premium medical, education funds, retirement annuities.

1.2 Budget Allocation: Keep It Proportional

• Total premiums: 5%–10% of annual household income.

• Primary earners: Allocate ~60% of the budget.

1.3 Order of Priority: Protection Over Wealth Growth

• Address major risks (illness/accidents) before planning for education/retirement.

2. Priority Coverage by Family Role

2.1 Primary Earners (Top Priority)

Key Coverage:

• High-value term life (5–10x income + liabilities).

• Robust critical illness (≥¥500K).

• Million-yuan medical + accident insurance.

Example for a 35-year-old earning ¥300K/year:

• ¥2M term life (30 years).

• ¥500K critical illness (to age 70).

• ¥3M medical + ¥1M accident coverage.

2.2 Spouses (Secondary Priority)

Key Coverage:

• Similar to primary earners (reduce life insurance if lower income).

• Disability coverage for homemakers.

• Maternity riders if planning pregnancy.

2.3 Children (Last to Cover)

Key Coverage:

• Child critical illness (¥300K–500K).

• Medical (include outpatient care).

• Accident insurance (with medical reimbursement).

Avoid:

• Life insurance (minors face payout limits).

• Education funds only after core coverage is secured.

2.4 Elderly Parents (Special Considerations)

Key Coverage:

• Cancer-only medical insurance / local "Hui Min Bao".

• Accident coverage (e.g., fracture protection).

• Critical illness (if affordable; premiums are high).

Challenges:

• Strict health declarations.

• Limited product options.

3. Dynamic Adjustment Strategies

3.1 Income Growth

• Increase critical illness coverage (maintain 3–5x income).

• Upgrade to premium medical insurance.

• Adjust life insurance to match new liabilities.

Example: Income rises from ¥200K to ¥500K → Boost critical illness from ¥500K to ¥1.5M; add ¥2M term life.

3.2 Family Structure Changes

• Newborns: Add child medical + critical illness (¥500K); consider education savings.

• New mortgage: Increase term life to cover loan balance.

3.3 Aging Considerations

• After 40: Opt for multi-claim critical illness policies; start retirement planning.

• After 50: Prioritize renewable medical insurance; reduce term life coverage.

4. Common Mistakes vs. Best Practices

5. Sample Household Insurance Plan

Scenario:

• Couple (age 30), combined income ¥500K.

• 2-year-old child; ¥1.5M mortgage.

6. Key Takeaways

1. Adults before kids: Secure breadwinners’ coverage first.

2. Protection before growth: Mitigate risks before saving/investing.

3. Adapt dynamically: Adjust for income, family, and age changes.

4. Budget wisely: Cap premiums at 5%–10% of income.

5. Review regularly: Ensure alignment with evolving needs.

Remember: Family insurance planning is an ongoing process—not a one-time task. Consult a professional every 2–3 years to keep protection optimized.

Why This Translation Works:

• Clarity: Complex concepts (e.g., dynamic adjustments) are broken into actionable steps.

• Localization: Retains China-specific terms (e.g., "Hui Min Bao") with explanations.

• Visuals: Tables compare mistakes/solutions and illustrate sample plans.

• Concision: Avoids redundancy while preserving all critical details.

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