Insurance Guide: Things you need to know before you buy your first plan in Singapore
By Ajita Jha
Key Points of understanding
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Life insurance provides protection to you and your family against financial emergencies.
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Find out how health insurance works, what health insurance covers and why you need it.
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To make a wise decision, properly know the difference between term life & whole life insurance.
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Choosing the right travel insurance is the key to prevent expensive travel mistakes.
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Know your budget and financial goals before choosing the insurance coverage for a better outcome.
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Before buying, always research & compare insurance plans instead of solely relying on the insurance agent.
Introduction
Insurance is one of the key elements of personal finances. Acquiring the right and the most suitable kind of insurance will not only protect you but also your family who may be dependent on your income. Everyone wants to buy the best policy for themselves, however, the decision is mainly shaped by the budget constraints and financial objectives. Thus, it is imperative to choose the right coverage without completely relying on your insurance agent.
Types of Insurance
Insurance is a financial product and comes in as many as twenty types. The right information about insurance will help you understand how your choice of insurance will provide protection to your lifestyle, assets, and personal property. The most common types of insurance are:
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Life Insurance
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Health Insurance
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Travel Insurance
Life Insurance
A life insurance policy pays a certain amount of money which is called sum assured when any unforeseen incident takes place such as injury, accident, disability, or death. Generally, the sum depends on how serious the outcome is. The idea is to make compensation for the reduced earning capacity- so it does not include the cost of medical treatment.
The money you receive through this insurance is meant to support your family if you become incapable of sustaining them or are no longer present to do the same. Thus, this insurance is useful when you have children or other family members such as parents or siblings.
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Term Life Insurance and Whole Life Insurance
When you decide to buy life insurance, the terms term and whole life will certainly pop-up in your mind. They are simply two different types of life insurance that you have to choose, let’s have a brief overview to know them better:
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Term Life Insurance
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Whole Life Insurance
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Relatively cheaper
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Highly expensive
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This insurance can be useful for the ones with the family, as it covers your life until your children become financially independent.
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There are several subtypes of this insurance, such as Endowment plans that act as an education savings plan or a retirement savings plan to give you a large payout during retirement or when your child takes admission in a university.
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People mostly refrain from choosing this insurance because they do not get a single penny back if they sustain the term without getting injured or dying.
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This insurance is more popular among Singaporeans because you get paid back at some point even if you stay alive.
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The insurance covers the duration you choose i.e.10 to 30 years.
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It covers you for your entire life.
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If you are not able to decide how much insurance coverage you require, a common rule of thumb for the assured amount is 11 times your annual earnings. For example, if your income is $3,000 a month, you will need life insurance with a sum assured of $396,000. To be more precise, the amount usually varies from case to case, because the amount is determined by how much money is required by your family to live comfortably without you.
BankQuality is committed to easing the entire process of searching and finding appropriate institutions to engage with for the people who are new in the world of insurance and have difficulty in deciding what to look for before choosing the best life insurance. If you own any of the policies i.e. term or whole life insurance, you can share your experience as well as read reviews to make a better decision if you are planning to buy any of them.
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Health Insurance -What you need to know before buying?
Health insurance covers the expense of healthcare in Singapore, such as medical treatments, hospital bills, and several other health-related costs. To get compensation, you will be required to submit the hospital bill to the insurance provider.
In Singapore, everyone has basic health insurance – MediShield Life that usually pays for your hospitalization bill, but if you want advanced coverage then you can upgrade it with Integrated Shield Plan (IP). It will allow you to get treatment from A-wards in private hospitals for better medical care.
Travel Insurance – how to choose the right one?
Travel Insurance is beneficial for those who frequently travel. The farther your travel, the more uncertainty you carry around yourself. You never know when you will get stuck at the airport because of an airport strike, or get duped by strangers or fall ill due to eating different cuisine. Although these situations may not seem life-threatening, they can be very expensive.
You usually receive compensation for the following scenarios from an insurance provider:
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Missed flights
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Hijacking or kidnapping
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Medical expenses during the trip
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Trip delays
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Trip cancellation
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Baggage delays
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Travel agency gets seized
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Lost baggage or other personal belongings
Travel insurance is relatively cheaper. But while choosing a plan, you should properly evaluate the price and other benefits to get your hands on the most suitable policy. Do not miss out on reading the “Exclusions” part of the plan to avoid facing any unwanted situation later. Also, if you travel way more frequently, choose annual travel insurance.
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Other types of insurance
The more progress you make in life, the more pressure you feel to protect your assets, be it a home, or a car, your family, or your business and want them to get insured.
Given below is the list of common types of Insurance in Singapore:
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TYPES OF INSURANCE
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WHEN IT IS NEEDED
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Mortgage Insurance
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When you purchase a house with a mortgage
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Home Insurance
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When you buy a house
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Car Insurance
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When you buy a new or used car- mandatory
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Fire insurance
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Mandatory for HBD flat with HBD loan
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Parental & Child Insurance
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When you have a child
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Personal accident insurance
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If you have a risky job. Similar to life insurance
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Maid insurance
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When you hire a maid- mandatory
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Pet Insurance
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When you get a dog or a cat. Includes hospitalization &kennel fee
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Business Insurance
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When you start your own company
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Final Note
Buying insurance is one of the most significant investments which is required to be made wisely. But at the same time, it does not have to be a stressful process. If you have trouble deciding which insurance will best suit your needs, you can always reach out to online aggregators or talk to your insurance provider, expert brokers to know and compare different policies available. Do not solely rely on one agent or a website to arrive at the best decision. Feel free to take all your time to know your insurance so you can rest assured that your investment is the right one.
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To learn more about Term and Whole Life insurance click here.
