3 Types of Insurance Policies in Singapore
It is common for us to use insurance policies to hedge against some financial loss. However, not all insurance policies are designed to be the same. In fact, there is no “one size fits all” policy. Therefore, it is important for us to have a basic understanding of what is offered in the market. In general, there are
3 types of insurance policies.
1. Life & Health
Main Purpose: Cover events concerning the life and health of a person (commonly referred to as the insured)
Commonly Covered Events: Death, Disability, Critical Illness, Medical expense, Long-term care
Type of plans available: Term insurance, Whole Life insurance, Investment-Linked Policies (aka ILPs), Personal Accident insurance, Hospitalisation insurance, Disability Income
Life & Health insurance provides financial security against financial loss arising from
three life’s major events:
1) dying too early;
2) inability to work till retirement; and
3) exhausting hard-earned savings too quickly.
I am the biggest asset that I own. Hence it is only right for me to insure myself comprehensively.
2. Savings & Investment
Main Purpose: To meet your financial goals
Commonly Covered Events: Wedding, Children’s education, House, Retirement
Type of plans available: Endowment plans, Investment-Linked-Policies, Life Annuity
Savings & investment requires the
ability to foresee how your future spending will be like.
Evidently, the world is becoming a more expensive place to stay in. While the cost of living continues to rise, bank interest rate remains low. Consequently, our hard-earned money falls in value over time.
To overcome this problem, we need to put our money into another channel that hedges against inflation. At the same time, it must not be readily accessible. Otherwise, we will always have the temptation to spend it rather than to save it.
3. General Insurance
Main Purpose: Financial coverage for your belongings
Commonly Covered Events: House, Car, Luggage (during an overseas trip), Jewellery
Type of plans available: Property insurance, Motor insurance, Travel insurance
Majority of the things in this world have a value to it. As such, general insurance provides coverage for those that you treasure the most. In the event of a misfortune, you will be fairly compensated for the loss. For example, a motor insurance will cover the cost of repair for vehicle damage.
Conclusion on Insurance Policies in Singapore
On the whole, insurance policies have increased in complexity over the years. More often than not, it takes time and effort for us to understand each policy and whether they fits into our needs.
By and large, we will rely heavily on our trusted insurance agent to advise us on suitable policies. In any case, it will always be helpful to have some basic knowledge on the types of insurance policies offered in the market.
All in all, we are responsible for the decisions that we make in our life.
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