7 Things to Pay Attention to When Buying an Insurance Policy
Singaporeans always feel the need for finance planning. While preparing the long-term financial plan, insurance is always a significant option that you can consider. It is your life’s goalkeeper. If everything else fails, you will need to count on your insurance policy to be there for your financial woes. Therefore, if you are planning to take any insurance policy, here are some of the things that you need to consider to take up the right insurance coverage you need.
1. Insurance Is Not an Investment
Insurance products are not evolving to cater to your multiple needs. In Singapore, there are life insurance products that provide you with options to invest via investment-linked products that come with an investment component where a part of your monthly premiums is used to buy units in the fund. Others build up cash value over time and you are able to get back a fixed sum of money for a set number of years. These products might be suitable, but they are not always the most cost-efficient ways to manage your money. It is preferred to separate your various financial needs and buy what you need, purely for the sake of coverage so that you do not have to pay extra charges.
2. Understand How Works
When you narrow down your search, you want to focus on the details and understand how each one works before making the final decision. You also need to understand concepts like deductibles and co-payments.
A deductible is a sum of money you need to pay before you make a claim. For instance, your health insurance has SGD 5000 deductible. So when you get hospitalized, you have to pay SGD 10000, you need to pay SGD 5000 first, and you are allowed to claim the remaining SGD 5000 later.
A co-payment portion is very common in health insurance policies as it means you will have to pay a percentage of the bill you’re trying to claim. For instance, if the policy requires 10% co-payment, you will have to form out SGD 10000 on your own if you claim SGD 100000 bill.
3. Understand the Type of Insurance You Need
You need to know the different kinds of insurance policies that are available, such as:
- Health insurance,
- Life insurance,
- Critical illness insurance,
- Disability insurance,
- Personal accident, and so on.
When you research and check out the coverage that the types as mentioned above of insurance have to offer, and match them with the list of things that you are expecting to be covered, you will be able to find the right type of policy for yourself.
4. Compare of Insurance Products
Insurance products are a little tighter to compare with, due to the difference in their coverage, several conditions, and the premiums charged. Therefore, the Monetary Authority of Singapore (MAS) has launched its Direct Purchase Insurance initiative last year, which allows consumers to compare and buy basic life products directly. Though the product range is limited, and you still need to contact a specific insurer to purchase a policy, MAS is a useful tool to get yourself acquainted with the types of products available.
5. Do Not Ignore the Exclusions
There is insurance that does not cover all conditions similar to what they sound like. For instance, certain health insurance policies don’t include all types of health conditions. You need to ensure that if you have an existing health condition, you need to declare it before you buy your policy. It may also include your family’s health history and your propensity towards getting certain types of disease. The reason why you need to declare these aspects is to pay years of premium and not being able to proceed with the claim because the condition was excluded.
6. Don’t Get Over-insured
There are many types of insurance available to choose from. But, there are times where you can’t find one single insurance policy that encompass all the conditions that you are looking for. There is a chance you might end up buying a few insurance policies that overlap in coverage. The fact is, there are no insurance policies that will cover all-in coverage. As a result, purchasing a few insurance policies will probably end up paying thousands of dollars of premiums to pay per month. The best way to get around this is to establish your coverage policy according to your life-stages. For instance, if you are a young adult, it is preferable for you to take a hospitalization plan rather than taking a critical illness plan which is preferably taken by an adult in its thirties. If you are looking for an insurance policy that offers financial coverage to your family that is financially dependent on you, you might look into getting a term plan with death benefits or disability income plan. So list down your needs to look for a plan that is suitable and affordable for you.
7. Don’t Buy Because of Friendship
Singaporeans still rely on their friends and family for financial matters and planning. But, sometimes you need to spend time getting educated and understand your needs to choose a suitable insurance policy. When you buy an insurance policy from someone familiar, you might take the advice for granted and trust without doing relevant research or taking a second opinion. Your friend or relative might have different financial goals and taking their advice might prevent you from looking out for more insurance policies that might be suitable for you and achieve your financial goals.
Do your research to find out what is best for your budget and lifestyle, and then try to approach the insurance agents. You need to remember that no insurance policy can cover everything that you are expecting. So, plan and stay financially secure for you and your family in Singapore.
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