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Insuring Your Future
When asked, the youth of Singapore would easily agree that insurance is a necessity, but very few have a thorough understanding of insurance. Not surprising. The complexities of insurance intimidates people, while its technical jargon confuses most. How many among us understand terms such as “accelerated critical rider” and “dread disease coverage?”
However, in our contemporary world, one cannot afford to be ignorant about insurance. Life is unpredictable and even the best plans go awry. Insurance serves a similar purpose to diversifying your investment portfolio: it manages risk and protects you. When an accident happens, the potential loss you suffer is transferred to the insurance company you have aligned with.
The aim of this article is not only to help you understand why insurance is important, but also to hopefully compel you to take steps in insuring yourself.
Different Insurance Coverage and How to Get Them
Insurance may be a complicated topic to dissect, but it is also familiar. Most of us have experienced the presence of insurance in our lives. As a child, you may remember watching your parents recover some of the losses when your baggage is lost after a flight. Or watching your parents claim some of the costs of an expensive medical procedure.
There are many types of insurance you can protect yourself with, but for the sake of brevity, we will only focus on the two forms most essential to everyone: life insurance and medical expense insurance. These two categories protect your current way of life. Chances are, if you are well-covered in these areas, your future is insured.
Life insurance generally covers you when a terrible accident happens, such as death, loss of limb (also known as total permanent disability or TPD), or critical illness (such as cancer). The purpose of life insurance is to protect those dependent on your income, whether it is your significant other or your children, so they can survive if something disastrous happens. It is never too early to get life insurance for yourself as premiums will increase as the years go by. Getting insured earlier means paying less in premiums in the long run.
Buy Term and Invest the Rest is a common practice amongst insurance-savvy Singaporeans. It simply means buying simple-term life policies that offer coverage on death, total permanent disability, as well as an add-on critical illness coverage. Then, spend the money left over on an Investment-Linked Policy.
Medical expense insurance pays for expenses incurred because of an accident or illness. Medical expenses can arise from any of the following medical treatments or procedures:
- in-patient medical treatment or surgery
- day surgery
- consultations with specialists before, during, and after the hospital stay
- X-rays and laboratory tests
Meanwhile, ‘major’ medical expense insurance will pay for heavier hospital expenses due to major illnesses like cancer or major surgeries such as heart bypass and organ transplants.
How much should you be insured? Look at the amount you need in order to sustain your current expenditures. You should also project your future expenditures and consider the expenditures of those dependent on you. To calculate these figures, CPF and Citibank have good calculators that can offer you insights on how much you need to be insured.
Monitoring Your Insurance Policy
Now that you have purchased an insurance policy and are now well-covered, what’s next? You’ll want to make sure that your policies are always paid for, so you are always protected. You’ll also want to stay ahead of the game in insurance – meaning, you need to make sure your policies are not outdated. When you buy new policies or get new corporate policies, you want to make sure that you are paying as little overlaps as possible.
PolicyPal started with the aim to help you understand, manage and buy your insurance policies. We provide you with a digital overview and analysis of your existing policies to identify any protection gap in your insurance portfolio and help you to better understand your coverage. Our partnered independent financial advisors provide a holistic review of your portfolio and let you know what’s missing in your coverage. You never have to worry about overpaying or being under-insured.
Sign up for an account and upload your insurance policies for a free portfolio review today!
*This article is written by PolicyPal and also shared on Funding Societies.