Check out the 5 financial tips for the first week of May 2013.

Tip no 1: Have a clear understanding of how health insurance works. It might just save your life.

Check out different articles on health insurance policies. Get detailed information on the various types of policies, premium rate, coverage, etc. Get an overview of the main health insurance policy terms. You'll be able to know how a health insurance policy can actually help you during medical emergencies.

When you're purchasing an insurance policy, do read the terms and conditions of the agreement carefully. Find out about the policy exclusions and your out-of-pocket expenses. Know about your deductible amount. This will help you calculate the amount you've to pay before the insurer makes any payments.

Tip no 2: Learn how to allocate your assets carefully. It will help you cushion the impact of future costs and losses.

Diversification is very much important in asset allocation. You need to have a balance between aggressive and less aggressive investments. This will help you minimize risks and attain your goals.

Various types of investments are affected by the changes in the economy in a different manner. So, owning various types of investments is a good way to lessen the chance that your portfolio will be negatively affected by a specific risk type.

Develop a solid asset allocation strategy. Try to avoid making such investments which will never help you achieve your financial goals.

Tip no 3: Disability insurance is indispensible. You never know when you might meet an accident at work.

You would never like to imagine a life wherein you're disabled and out of work. However, the real life is vastly different from our imaginative world. People do meet accidents and get disabled. They are unable to work. As such they have to live life without any income. Disability insurance becomes indispensible during such times. This is because it helps to replace a part of their income when they can't work due to disability.

In fact, a normal group plan can help disabled people to earn around 60 percent of their wage for a certain period of time. However, no plan gives coverage for the entire lifetime for the insurers are afraid that disabled people won't have any motivation to resume work.

Tip no 4: Begin your estate planning by taking inventory of your assets.

Your assets comprise of various things such as your nest-egg, insurance policies, real estate, investments, etc. You need to analyze your assets before starting your estate planning. Other than that, think about the person to whom you want to leave your property and assets. Think rationally about the person who can tackle your financial affairs when you're not fit to make any decision. There is another factor, which you need to consider before beginning your estate planning. There must be someone who can make the medical decisions when you're not in a position to make them for yourself. You need to choose that person carefully.

Tip no 5: Cut down on your estate and gift taxes by setting up a trust.

There are multiple benefits of creating an asset. The first benefit is that you can decide how to allocate your assets after your death. You'll be able to allocate your assets amongst your heir without bearing the expenses of probate court. The second benefit is that you can reduce estate and gift taxes efficiently.