What kind of insurance to buy? Do you need it?
Insurance offers protection but how do you know that you have bought the right type of policy?
Illustrated below are five common type of insurance plans and also a few tips to help you decide which suits you best.
1. Death and Total Permanent Disability Insurance(TPD)
- A policy that pays out a large sum when you die or are severely and permanently disabled.
You need it most: If you have dependents for eg. Spouse, children or elderly parents. Such plans are essential if you are the sole breadwinner of your family. The large payout from such a policy will provide for them if something were to happen to yo u.
You need it least : If you are single and have no dependents. You may not have the need to insure for death but the need might come in the future should you be married. You DO need a policy that cover you for disability.
2. Disability Income Insurance
- A policy that compensates you for your loss in come due to illness or injury.
You need it most: If you hold a professional job with a specialisation that gives you high income. Example: Medial doctors, engineers,etc
This type of insurance is one of the most expensive and you should decide based on your income level and the probability that you could lose your income due to illness or injury.
You need it least: If you monthly income is less than $2000 or you have a small monthly budget for insurance premium.
3. Accident Insurance Plan
- A policy that pays out if you are injured in an accident.
You need it most: If you are just starting out on your career,it is a first step towards getting insured. Premium are low and accidents can happen to anyone. Essential for individuals who have dependents and cannot afford other types of insurances. Getting this as a separate policy instead of as a rider on a life policy is usually more economical.
You need it least: If you are already covered by your company accident coverage. You cannot double claim for medical expenses if you have 2 policies but life and disabilities benefits you can. If you leave your company, you would no longer be covered.
4. Hospitialisation plan
-A policy that pays out when you are hospitalised
You need it most: ALL the time. Everyone should have one hospitalisation plan. Rising hospitalisation costs make this one of the most important for one to have. Statistics from Ministry of Health shows that as of 2008, A class wards at government restructured hospitals cost $634-982 per day.
5. Critical Illness Plan
- A policy that pays out when you are down with one of the 30 critical illnesses
You need it most: When you have liabilities such as mortgages, loans or dependents.When you are down with a serious illness and cannot work, you need the payout for your medical cost and to make up for the loss of income. However critical illness plans can be very expensive and are usually attached as riders on life policies.
You need it least: If you have no liabilites, no dependents, no loans,etc
but since you are alone, if you are sick and cannot work, you would still need a sum of money for your living expenses and medicial costs.
