Why Should I Buy Insurance?
I believe that this question has popped up in your head every time you are approached by financial consultants or come across an insurance product at the financial institutions. For me, I always recommend someone to buy insurance to address his/her “WHAT IFs” situations. This ‘what ifs’ are low probability events and unlikely to occur. However, it is still important to be prepared for them because when it does happen, the effect is usually quite severe. Remember, prevention is always better than cure. Thus, you should prepare yourself before it is too late.
What can happen to you or your family?
Throughout my 3 years, and counting, experience as a financial consultant, I have seen a few of my clients went through a life-changing experience, albeit unpleasant ones. The incidents include serious accidents that cause disabilities, life-threatening illnesses, and even death in the family. Although the scenarios might differ from family to family, the impact that they create is similar. First of all, there will be loss of income, especially if the incident involves the breadwinner of the family which in return will cause the dependants to be financially insecure. In anther scenario, the sole breadwinner might not be affected by the incident physically but he or she needs to shoulder the burden of paying for hospitalization cost for his or her family members that are involved.
The right protection for you
To protect yourself and your family against these unforeseen circumstances, a whole life or a term life policy with critical illness and total permanent disability benefits is suitable to compensate for major illness and total permanent disability. Examples of major illness are cancer, kidney failure, heart failure, etc. However, the problem with insurance products is that there is not one policy that can cover all your protection needs. Hence, one insurance policy might not be enough and you need to complement it with other policies.
For Critical illness cover, the payout is usually paid in the final stages of your illness and you will not get anything at the point of detection or earlier stage. In this case, it is most likely that your dependents will receive the payout as your chance of survival will be minimal at the later stage of your illness. Thus, you have to opt for early payout. To cushion the financial blows that the illness brought due to prolonged treatment, you should get the best shield plan available in the market. The shield plan will be able to cover a substantial amount of hospital treatment and warding when you are contracted with the illness. If your budget only allows you to buy one insurance plan, Shield plan should be your choice as hospitalization costs usually cost a bomb, especially in Singapore. For the elderly, eldershield can be bought in case they lost their ability to carry out daily functions and require private nurse to look after them.
For Total Permanent Disability cover, the payout is only paid when you lose a pair of limbs or when you are in no condition to work anymore to support yourself and your family. The solution is to buy an accident plan which has various payout percentage of the sum assured for disability of different parts of your body. In this case, you can claim if you lose a leg or an eye and need not be a pair. However, an accident plan is only claimable if your injury or disability is sustained during an accident. Alternatively, you can buy a Partial Disability Income Policy. In the event that you are unable to work, be it due to accident or illness, you can still be compensated monthly even if you are in a wheelchair and are recovering.
You can get a disability income rider if you are concerned about income upon disability. This is a very good way to get you protected and covers your income in the event of disability.
Better late than Never
After reading the article above, you should realize that it is important to insure yourself against unforeseen circumstances that will have the biggest impact on your life. There is no point in looking at the gains or returns when buying an insurance policy as it should not be the main reason to buy insurance. Some young people that I’ve met will say that such accidents or illness will never happen to them but I always tell them to ‘never say never’, not because I want to curse them but because I’ve seen a few of my clients who are around my age went through similar incidents that I had mentioned above. Trust me; you would not want it to happen to you too. One must always value one’s life. That is why insurance can be the best gift that you can give to yourself and your loved ones. So, please do your part in protecting yourself and your family now!
PS: This article can also be found under the blog corner: www.imsavvy.sg
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