So what exactly is Insurance?
Insurance is the transfer of risk by an insured to the insurance entity. The insurance entity receives payment in the form of premium and will compensate you in the event of losses or damages sustained.
No one likes to hear this taboo word – Insurance because it equates something untoward may happen. Moreover, horror stories of how Insurance agents mis-sell their products to get their lucrative commissions just seek to turn people away.
However, Insurance is a must especially with rising healthcare costs and changes in your dependants’ needs in this modern era. For a reasonably affordable rate, it helps to protect you and your family against significant potential losses and financial hardship and most importantly a peace of mind.
What are the types of Insurance?
By and large, there are 3 main categories of Insurance namely: Life Insurance, Health Insurance and General Insurance. Let’s find out more below:
- Life Insurance
A life insurance policy pays out an agreed amount known as the sum assured under certain circumstances. This will be paid to you if you are permanently disabled or critically ill, if your policy provides for this, or paid to your estate if you are no longer around. This money is intended to help you meet your financial needs and / or those of your dependants if these events happen.
Some of the policies under this category include Whole life insurance, Term insurance and Endowment plans etc.
- Health Insurance
Health insurance may be the most important type of insurance you can own. Without proper health insurance, an illness or accident can wipe you out financially and put you and your family in debt for years.
To help you and your family cope with expenses at these times, there are different health insurance policies available such as Hospitalization insurance, Disability Income insurance and Critical illness Insurance etc.
- General Insurance
General insurance gives you some financial coverage against a range of events or losses which could be suffered, for example the loss of your belongings, or damage to car or house. If the event happens, your insurance company will pay you an agreed amount, or an amount to cover some or all of the loss.
Some of the policies under this category include Travel insurance, Motor insurance and Home Insurance etc.
Questions to ask yourself before you buy Insurance
- How much do I need to plan? And for how long?
- Can I afford the premiums for the long run?
- Have I shopped around and compared the products enough?
- Are there any limitations (e.g. how much co-insurance and deductibles you have to pay for Health Insurance first before the policy reimburses your medical bill)?
- What if I stop paying? And what are my options?
- Do I trust the agent? How many years of experience can he/she bring to the table?
All told, you can also turn to this website which has tons of useful information on Insurance as a whole.