If you aren’t familiar with insurance, you may simply think of it as financial or health coverage. While you’re not technically wrong, there are many other aspects of insurance and many types of plans to choose from. Here is a quick, simplified guide on the five most important ones you should know, depending on your needs.
1. Health Insurance
Every Singaporean will have basic health insurance, thanks to MediShield Life which can cover a majority of your hospitalisation expenses. However, MediShield benefits are based on the cost of staying in a B2 or C class wards in public hospitals. If you’d like to get additional coverage, you can opt for other options such as Medical Expense Insurance, Hospital Cash Insurance, Critical Illness Insurance or Disability Income Insurance. Having two plans can be useful if you forecast many out-of-pocket costs because one can never be too sure!
2. Life insurance
Are you the main breadwinner in your family? If you are, you may want to consider getting life insurance. Touch wood, but in the event that there is a loss of income or even your death, your loved ones will still have some form of financial security. There are a variety of life insurance products out there, and here are just some of them:
Term Life: Offers pure insurance coverage at the lowest premium. In the event of your demise, your dependents will be covered with a lump-sum payment. Coverage only applies to a limited time frame.
Whole Life: At higher premiums, this plan allows you to grow your money while gaining coverage for life. Premiums are typically fixed and you have the option to partially withdraw money in the form of annuity payments.
Endowment: Allows you to build cash value over a fixed period with the aim of achieving a long-term goal.
3. Travel insurance
This may not be the most relevant in the reign of the Coronavirus, but it’s good to know. Many things can go wrong on vacation, such as delays, theft or accidents. Getting travel insurance will cover the financial costs of your belongings, flights, money or medical expenses when you go overseas. Now with the pandemic, some airlines such as Singapore Airlines and Scoot also offer Covid-19 cover protection to passengers.
4. Home insurance
Besides being a roof over your head, your home is also a giant asset and expense. Some home insurance you can apply for include the Home Contents Insurance which provides protection in the event that fire, theft or accidents destroy your home and contents, as well as the Mortgage Protection Insurance that offers protection for the outstanding capital of a mortgage loan in the occasion of you of your spouse’s death during the policy term.
5. Car insurance
If you have a car, chances are that you love it like you would a baby. There are three types of car insurance plans namely the TPO (Third-Party only), TPFT (Third Party, Fire and Theft) and Comprehensive. Firstly, TPO offers the most basic car insurance coverage and only protects affected third-parties that’s proven to be your fault. You and your car will not be covered.
Just like its name, the TPFT plan covers any loss or damage caused by fire or theft, but indirect causes that result in loss or damage will not be covered. Lastly, the Comprehensive car insurance includes the benefits of TPO, TPFT and accidental damage to the car. It also covers other medical expenses of the on-board passengers.