Disaster can strike at any moment, and they often come with a huge financial hit. Fortunately, there is a way to preemptively protect yourself from it – insurance. In this article, we will discuss all of the important things that you need to know about insurance companies in Singapore.
Without further ado, let’s start:
The main reason why you should get insurance
An insurance policy is not intended to be a substitute for your ATM to keep money until you need it. It is also not meant to be an investment. The truth is, the majority of people should hope that they will never have to claim their insurance.
This is because the typical cause of insurance claims results from a disaster, such as untimely death, bankruptcy, permanent disability, etc. Insurance is just meant to act as a safety net in case those things happen.
There are numerous reasons for getting insurance, but the main reason to get it is to protect yourself from a potentially devastating financial obligation later on.
Insurance coverage will provide you with peace of mind against such events. This will be discussed in greater detail in the next point.
Insurance is a means to protect you and your family against monetary harm
Although you might be careful with your finances, you are still at risk of financial ruin from disastrous instances. As stated above, one of the main reasons for getting an insurance policy is to negate the chance of suffering from monetary ruin.
Car insurance suits this classification, along with health and business insurance. Disaster insurance also fits this description. Being able to comply with court decisions and rebuilding your losses after having a disaster are two crucial arguments on why you should get insurance.
Meanwhile, insurance meant for your private property, like fire and renter’s insurance coverage, provides a secure feeling to the policyholder since they know that they are covered even in case of disasters.
Not having insurance for crucial areas such as health, and the most important assets like car and house can result in a gigantic financial mess that will be extremely hard to come out of.
Two main types of insurance
Term insurance comes with a time duration in which you will be able to make a claim in case something bad happens. Once the term ends, you will have the option to extend the insurance for a cost. Term insurance is common for vehicle insurance, health insurance, and life insurance.
Permanent insurance is a type of insurance more commonly associated with life or health insurance. As the term suggests, this insurance will last through the insurance holder’s lifetime as long as the insurance is paid. It can also be customized to include a death benefit.
If you are getting insurance as an investment, you better buy something else
As stated in the above point, insurance is not an investment and shouldn’t be treated as such. Even though there are some insurance policies that provide returns, the revenue that they will generate is dwarfed by more proper investments.
The return that life insurance with investment components have is not optimal and they will never be a substitute for normal investments.
When is the right time to purchase insurance?
Insurance policies are designed to offset financial threats. Having said that, having insurance coverage is not required at all times. There are many insurance plans for countless potential conditions and a good number of them are simply not relevant to everyone.
Health insurance is useful and is less expensive to buy if the person to be covered by insurance is healthy. This is because insurance is an industry relying on odds.
A healthy and young person will probably not make a claim on their health insurance, as opposed to someone who is old and has an unhealthy lifestyle. It is important to time your insurance purchase to get the best deal for yourself.
Buy insurance only if it is expected that you will need it at some point. Buying insurance early can result in having lower monthly premiums, however, you should still take the time value of money into an account. Regardless, applying sooner is way better especially for health insurance.
If you want until you get sick before getting insurance, there is a high chance that your application will be rejected. You might be able to get insurance, but it will probably be costly, and sometimes the insurers will not cover your already existing health condition.
Bear in mind that insurance is intended to offset long term financial problems, and therefore it could guarantee other significant positive aspects, like preventive health care or to serve as money to buy food following a serious accident at your workplace.
Where to get your insurance policy?
Preferably, you should get your insurance from a big company with a lot of clients. This is because a large insurance company is less likely to go defunct compared to a small insurance company.
For a full guide of where to get your insurance policy, kindly read our other article – A Guide On Choosing The Best Insurance Companies In Singapore.
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