Both insurance and investments are required in a holistic financial plan for your long-term well-being. While they can be seen to be equally important, a common question arises – which should come first?
To answer this question, you have to understand what you're trying to achieve when you buy insurance policies and when you make investments.
Insurance, in essence, is primarily meant to protect your current wealth and your future earnings. In the event you are no longer around, injured or disabled, your insurance will enable you and/or your family to continue living a similar standard of life.
On the other hand, investments increase your wealth over the long-term. Your investments, as well as its returns, can be used to fund your retirement and other major life expenses, such as your children's education, so you don't have to always rely on the income you earn from working.
This means that we cannot do without either. Having insurance alone will mean that you need to continue earning a wage to sustain yourself and your family for the rest of your life, even if your wealth and income are protected in unfortunate circumstances. Having investments alone will mean that while you're steadily building wealth and accomplishing financial goals, any unfortunate circumstances in the near-term will leave you and/or your family financially vulnerable.
