There are so many uncertainties in life. At one point, we may feel secure with our personal situation, yet it is inevitable for something to come up whether we like it or not. This is why it makes perfect sense to buy insurance to give yourself peace of mind in case such unexpected instances may come our way. It is all a matter of knowing how to buy the right one that works for your specific needs and budget.
Insurance serves as a policy or contract that entitles you to a financial protection against unforeseen difficulties or losses. With insurance, you have a sense of security from unwanted and unexpected events in your life whether it is a permanent disability, health issue, damaged vehicle, death of your spouse, or a critical illness.
When buying insurance, be sure to identify your situation before you decide on the type of insurance that works for you. Since it may be confusing for a novice to know exactly what certain insurance jargons and policies mean, the following guide can help you before you invest in an insurance policy here in Singapore.
1. Know the price you need to pay
The cost of insurance varies depending on the inclusions in your insurance policy. There are also varied rates offered by Singapore insurance companies. Thus, you will need to shop around and check different insurance firms and agents to learn more about the rates they are offering. Ask for quotes, know about the coverage, and learn more about the background of the company.
But aside from the price tag, you should also look into other factors since choosing cheap insurance does not always guarantee security. In terms of practicality, though, the price matters a lot. At the same time, consider the reputation of the company, the level of service you can get based on feedback from actual customer, and your overall judgment of the insurance company in question.
2. Determine the type of insurance you need
In Singapore, you can find three basic types of insurance offered by companies. These include the life insurance, general insurance, and health insurance. Each has its own unique features, so it is important that you take a look at what the policies entail and how these can help you in your particular situation in life.
a. Life Insurance
One of the main reasons why people buy insurance is for the sake of their loved ones. They want to be sure that once they pass away, their family members will have no problem with facing the ongoing expenses even if the breadwinner is no longer around. With this policy, your dependants, as well as yourself, are protected through the sum assured to you under various circumstances whether these may be critical illness or permanent disability.
If you are the one working for the family, then everyone else depends on your income for their expenses. The bills to pay never stops, and it can be a cause of anxiety for your dependants if the cashflow also stops. This is why experts recommend that your life insurance policy must be able to cover at least 10 times your annual income to maintain a sense of security even when the most unexpected situation comes your way. This amount of money should suffice for your existing expenses and as a financial cushion for your loved ones. With the money they receive, it will be more bearable for your family to re-group even after you pass away.
In addition to your funeral expenses, make it a point to look into other expenses that your dear ones are bound to face. These include their living expenses such as credit cards, child care, loans, and college tuition, and also mortgage payments. You can find insurance companies offering term life and whole life insurance, which both have their unique features. The main difference lies on the duration of the payment since with term life, you only pay for a set length of time while whole life involves payment made until your death.
b. Health Insurance
Health insurance refers to the policy that covers disabilities, illnesses, and accidents potentially impacting your health. You should be able to find various health insurance policies offered by firms that would better suit your life. Since health issues can significantly prevent you from experiencing the same kind of lifestyle you have right now, particularly if you can no longer continue working, then your insurance policy will be able to give you the assistance that you need.
When you look for health insurance, you need to determine the adequate coverage for your condition. Shopping around and comparing rates from different insurance companies can help a great deal. But at the same time, it may be tough finding a reasonably-priced health insurance policy. Yet, if you have even a minimal coverage, this can still help in the event that you are hospitalized due to an accident or illness.
c. General Insurance
Life throws in unexpected situations at us. We can never prevent these from happening, but we can always prepare and get more settled in case these unpredictable events occur. Your insurance company will be the one to pay you and cover the agreed amount whether it is the entirety or just a portion of the loss incurred.
Auto insurance, for insurance, is a necessity if you have a vehicle. Considering road accidents that happen every single day, it would be stressful and not to carry auto insurance. If you are driving your car without insurance and an accident occurs, it is likely that the least of your worries (financially) would be your fines. After all, your car is a valuable property that you use on a daily basis whether for work or leisure. Not having auto insurance can result to numerous problems if there is a damage to your vehicle. Having it repaired can cause a large sum, and your insurance can save you from having to dip into your savings to have your vehicle fixed.
Moreover, if you, the other driver, or your passenger is injured during the accident, all expenses incurred are covered by your auto insurance. What’s more, this type of insurance can also give you protection against natural disaster, vandalism, and theft. It is just a matter of determining the cost of auto insurance that suits your needs. Request for quotes from insurance companies, have a clearer understanding of the coverage, and do a periodic check to know more about your qualifications for discounted rates, if applicable.
3. Identify the terms involved in insurance policies.
There are jargons you might encounter when you are in the process of researching about and buying insurance. So, here are some common terms you might encounter during your search for the best insurance policy for your needs.
This insurance policy pays out the fixed income payment at a regular timing for your retirement period. You can expect a sense of security and stability to your portfolio, as long as you use an annuity efficiently. With this type of policy, you can expect to receive income for a specific period in life, attain asset growth, obtain long-term health care benefits, and receive a death benefit.
The premium is the cost of protection for a specific risk or period. This may increase after the end of your policy period, once the cost of the coverage provided increases, or if there is a spike in the risk linked with the type of insurance offered. Generally, the premium covers the liabilities connected with the policies underwritten and the possibility to invest your premium in generating higher returns.
c. Whole Life Insurance
If you want lifetime protection, then whole life insurance is what you need. With this policy, you have the assurance that it can pay you the total sum you are insured, as well as additional cost you have incurred before you are either permanently disabled or prior to your death.
Money is your Insurance
Whilst having insurance is essential, one should always be prepared for rainy days as you won’t know what will happen the next minute. Things are unpredictable and when unfortunate things happen, who will be there for you? If you are lucky, your friends and families will be around to lend you a helping hands. However, what if luck isn’t on your side? You can always look for temporary measures such as getting personal loans to tide over these periods.