The 5 Types of Personal Insurance that you should know about

The road to adulthood is an ever-changing experience that comprises many responsibilities. A large portion of the responsibility revolves around taking care of our personal health and finances. As we learn to navigate through this tough phase in our lives, we often hear the term “personal insurance”.

As much as we dread the thought of having to incur another form of expense, we eventually come to terms with the importance of getting coverage to protect our hard-earned wealth against unknown and disruptive life events. Sickness, accidents and even an untimely death can evaporate our hard earned nest egg in an instant!

This then begs the question: What kind of personal insurance should I get?

With the various types of policies in the market nowadays, it can be an overwhelming experience when it comes to deciding the most appropriate and cost-effective coverage.

Therefore, in this article, we have summarised and narrowed down the 5 different types of Personal Insurance that you may consider to better protect your wealth from negative life events and provide you the peace of mind you deserve!

Health Insurance

One of the most essential coverage that anyone should get would be health insurance.

Due to the incredible advances mankind has made to extend and preserve life, the nature of medical treatments has grown to be both effective (and costly). The purpose of health Insurance is to cover for the costly medical bills that you incur when you are hospitalized.

Fortunately, if you are a Singaporean, you already possess a basic health insurance known as MediShield. However, it can only cover the costs of treatments and Class B2 or C wards in public hospitals that are limited at $150,000 per year

Additionally, there are private insurance policies known as Integrated Shield Plan, that provide greater coverage by increasing the limit of claims that you can make per year for both specific treatments and hospital stay. Not only that, depending on the plan, it can also provide greater comfort during your hospitalisation as it includes the coverage for Class B1 or A wards at both public and private hospitals.

To top it off Integrated Shield Plans also allow for the purchase of a rider that costs only a few hundred dollars per year. A rider significantly reduces the co-payment of medical expenses to only 5% of the entire bill.

With that said, It is important to note that being hospitalised can be a very worrying process. By ensuring that the medical expenses are well taken care of, it would reduce any form of unnecessary worry and allow the individual to focus solely on getting better.

Critical Illness Insurance

In some unfortunate cases, when an individual is diagnosed with late-stage cancer, one is most likely incapable of holding down one’s current job. As the reality sinks in, people will question as to how they would then be able to support themselves and their current family. This is where critical illness insurance would play an important role in providing coverage for you and your family.

This form of insurance plan pays out a significant lump sum of cash upon a confirmed diagnosis of a critical illness (stroke, heart attack, late-stage cancer etc.). This amount is meant to replace the amount of income that an individual would no longer be getting due to the illness. Most of the plans are largely similar in the illnesses they cover, but what is different is the amount of pay out that one will receive. A higher amount of premium would mean a higher payout should the plan kick in.

In the case of a critical illness, people would often want to spend their time with family members and loved ones. Ultimately, the last thing anyone would want to worry about is the financial expenses that we may have to face if one is not covered.

Disability Insurance

Disability insurance on the other hand, offers monthly payouts to replace an individual’s current income in the case that one becomes disabled. Similar to Health Insurance, Singaporeans are already covered under CareShield Life, which is a disability plan that offers a monthly income of $600 for individuals who qualify as severely disabled. To qualify as severely disabled, one must not be able to perform at least 3 out of 6 Activities of Daily Living (ADLs).

Similarly, private insurance companies provide a top up plan that offers additional payout according to a percentage of the individual’s income on top of CareShield Life. Additionally, some plans also allow individuals to qualify for it as long as the person is unable to do 2 out of the 6 ADLs. Depending on the amount of premium that one is willing to pay, the monthly payouts will vary in the percentage of income replaced and have a different deferment period of 2, 3 or 6 months.

Life Insurance

As the name suggests, life insurance provides coverage for a loss of life (death) or a lifelong disability. In the case where an one has passed from this world, this insurance would pay out a lump sum to the dependant of the individual that has been indicated in the plan. Similarly, it will also offer a lump sum payout should one be faced with a lifelong disability (becoming wheelchair bound, turning blind, deaf, loss of limbs, etc.). The sum assured varies according to the premium that is paid. Life insurance is one the most expensive coverage that an individual can pay for. Therefore, it is important to consider the person’s needs, along with the pros and cons of getting it before making any form of decision.

Personal Accident Insurance

Lastly, Personal Accident Insurance covers for any medical expenses that arises due to injuries and accidents. These expenses are incurred from injuries (dislocating a joint, a bad sprain, or severe cut, etc.) that do not require the individual to be admitted into a hospital. As some personal accident insurance also covers death, it is important for one to consider the necessity of it. The reason being that individuals with life and health insurance usually have sufficient coverage, therefore, this plan may be only based on the individual’s lifestyle needs.

Conclusion

It is important to know that every individual possesses different needs and priorities. By understanding the different types of insurance and what they can provide, it allows you to gain greater clarity and a better knowledge of the options available to you. Most importantly, everyone should take the time to figure out what their priorities are and what kind of coverage best suits their lifestyle. Fortunately, there are many reliable professionals out there that offer to help individuals review their needs and provide the relevant advice.

Whether we are gradually exposed to it or thrown into it, the key is to embrace the change that comes with the responsibility and ensure that we live every day to the fullest. At Memento Mori, we are experts when it comes to protecting you and your family from life’s uncertainties. Let us know how we can help you to live your life to the fullest here.