Types of Insurance
A contract between an insurance company and an individual wherein the specific individual is compensated against the specific losses from the insurance company is insurance. The clients need to pay small amounts of funds to the insurance company. The insurance policies are used to compensate against the specific risks of losses financially. This can be big or small. There are different types of insurance in Singapore and any business or an individual can find an insurance company who is willing to insure them at a specified price. The most common insurance policies are life insurance, health insurance, auto insurance and homeowner’s insurance.
Different Types of insurance in Singapore:
Before planning on a specific insurance policy you need to have a clear understanding on the different types of insurance in Singapore and determine if this is an essential requirement.
Life Insurance in Singapore:
Talking about life insurance you have a choice between the ‘term insurance’ and the ‘whole life insurance’. For an average person it is definitely difficult to differentiate between the two terms and make a choice. Listed below is a step by step guide which can assist you with the required information on life insurance in Singapore. Choosing between the different types of insurance in Singapore can get convenient if you seek the help of a qualified professional.
*Difference between whole life insurance and term insurance:
As mentioned, insurance policies are taken for the required protection of financial losses. When talking about life insurance the term ‘loss’ means the ‘loss of life’ and disability on a permanent basis. Life insurance policies are designed to assist the dependents of the insurer financially in case of death of the one insured.
Before opting for any life insurance it is advisable to understand the difference between the term insurance and the whole life insurance.
a) Term insurance:
Term insurance offers protection and a coverage for total disability which is permanent and death. The coverage period for term insurance is either up to a specific age or a specific term period. The assured sum is paid upon the death of the insured. In case the policy is returned early there is nothing paid.
b) Whole life insurance: (endowment)
The endowment plan of the whole life insurance offers the required protection and also a potential to grow the savings. Most of these plans cover death besides the permanent total disability. The coverage period of this policy is right up to death. Upon the death of the one who is insured you receive the sum which is assured along with the bonuses which have been accumulated. In case of surrender of the policy you receive the cash value which includes non-guaranteed and the guaranteed bonuses. This can be an apt choice among the many difference insurance policies in Singapore.
c) Whole Life insurance: (investment linked)
The main objective of this policy is the potential offered to reap the returns of the investment along with the protection. The coverage includes disability which is total on a permanent basis and death. The coverage is right up to the death. Upon the death of the insured you receive units of fund besides the assured sum. In case of early surrender of the policy you receive the value of the specific units in sub-fund.
The difference between the term and the whole life insurance is the amount paid and the period of time the policies offer coverage. The term insurance coverage can last anywhere between 20 and 30 years. If nothing is claimed during this period you are offered nothing.
This type of life insurance is cheap and works apt in case you wish to provide for your dependent for a specific number of years.
Whole life insurance covers you for the whole life as long as the premiums are paid on time. Though expensive as compared to the term insurance there are chances of the money growing with the apt policy.
Investment-linked versus Endowment insurance policies:
Opting for the investment linked or the endowment life insurance policy from the very many choice of the different insurance policies in Singapore, is apt for most. The whole life insurance policies in Singapore include an investment or a saving component and thus can be considered as a saving. The features included in the whole life insurance tend to make these policies more expensive. Term insurance works apt for those looking for premiums on the lower side.
Building discipline for finance is convenient with the endowment policies as the component of saving is built-in with the premiums to be paid on a monthly basis.
An investment component replaces the savings component for investment linked policy. A specific part of the premium is spent on buying units of the investment fund. The investment-linked policy does not include values which are guaranteed. The fund performance determines the investment linked policy’s value. You get nothing if things do not work out.
The ILP is normally an apt choice for those who are looking for financial protection and investment in one financial product.
You need to ensure that the choice of the policy, be it ILP, endowment or term insurance, can fulfill the financial objective you have decided on. You need to also consider the costs of the policy on a long term basis.
- Health Insurance in Singapore:
Health insurance is one of the many different types of insurance in Singapore which can be considered as ‘necessary’. This insurance policies range from the basic schemes by the government like the MediShield Life, to additional coverage like the insurance for critical illness.
Health insurance cushions the family and the individual from the financial impact during an illness or even an accident or disability. Permanent Residents and Singaporeans are covered by the basic MediShield Life. You have the option of upgrading this plan with the Integrated Shield plan which offers more benefits and coverage.
*Government Medical Insurance:
The government medical insurance reimburses the costs of surgery and hospitalization at wards which are subsidized in restructured hospitals. These also reimburse specific out-patient and inpatient expenses within the set limit.
*Private Medical Insurance:
With the private medical insurance you are reimbursed for the cost of surgery and also hospitalization in wards of a higher class in not only restructured hospitals but also private hospitals. The specific in-patient and out- patient treatment are reimbursed with limits which are higher to those in government insurance.
*Supplement Medical Insurance:
Specific private medical insurances can be supplemented with the addition of riders for providing more of the required medical coverage.
*Disability Medical Insurance:
The disability medical insurance tends to replace a part of the income of the insured facing a disability due to an accident or an illness.
*Long term Care Insurance:
With the long term care insurance you are paid a fixed amount on a monthly basis for nursing treatment which is time consuming. This is only if the insured finds it tough to move around or eat.
*Hospital Cash Insurance:
The hospital cash insurance is a benefit which offers cash daily to the insured in case of hospitalization due to an accident or an illness. This amount given to the insured is fixed by the insured when opting for the policy.
You need to ensure you buy an insurance policy, especially the health insurance only after seeking the help of professionals and when you are in good health. Comparing the different benefits can help you make the apt choice.
- Auto Insurance in Singapore:
Auto insurance in Singapore is equally important among the many different types of insurance in Singapore. You need to be aware that in Singapore it is necessary that each car is covered by an insurance policy and the premium needs to be paid annually.
The car insurance covers are listed below for your reference:
*Third Part Cover:
This policy offers coverage for the legal liability of the driver for any damage to a property which belongs to another individual, such as fences, cars, streetlights and more. This also covers the legal liability of the driver for injuries to the body or death to the third parties and passengers caused by negligence. As this policy offers the least coverage it is termed as ‘the entry-level’ policy.
This policy covers incidents which occur 80km of Thailand, West Malaysia , borders of Malaysia besides Singapore.
*Third Party, Theft and Fire:
Besides the entry-level policy cover, this policy offers coverage for damage by fire, accidental loss and/or theft of the specific vehicle. This tends to cost a wee bit more as it offers more coverage.
Comprehensive cover works out the best for car owners as this offers total protection of the vehicle. Besides covering the legal liability of the driver for damage to property owned by other people, this also covers replacement and repairs of the vehicle owned by the insured/driver.
This does not include civic commotions, loss from riots or from strikes.
Some of the factors determining the Car Insurance:
Considering the following factors you can opt for the apt insurance for your car.
- Age of the Specific Vehicle: Insuring an old vehicle is much cheaper as the replacement parts can be bought used. Parts of a new car are normally expensive.
- Model and Type of the Vehicle: Turbocharged cars and coupes can be expensive with the insurance while insurance for a car which is off-peak can work out reasonable.
- Personal details of the Driver: The gender, age and the driving experience of a specific driver along with the past records and occupation can make a difference to the required auto insurance.
- Capacity of the Engine: The premium of an insurance policy of a car tends to rise with a high engine capacity.
- Certificate of merit: With this certificate of Merit you can avail of an additional 5% discount besides the no-claim discount on the premium.
- Loyalty Discount: There are specific insurance companies which offer rewards for the loyalty of an individual. Normally, the available discount is 5% after one year but tends to vary with the different companies. You need to get the required information on this before choosing a specific company for your car insurance.
Juggling of the financial commitments is definitely a stress for any individual. It is wiser to plan on insurance, be it life insurance, health insurance or a car insurance without wasting time. As mentioned, it is advisable to opt for health insurance when the going is good, that is, when you are in the pink of your health.
Insurance is considered as the safety net for finances and is an essential requirement for every individual. This also helps in protecting your loved ones from financial burdens in case of your demise. With the pt insurance you can defray the cost of day-to-day living. With the many different types of insurance in Singapore you can make a choice in accordance to your requirement.