Four Insurance Plans are All you need (25-Oct-09)

In this article, they highlighted the key coverages that an average person should have to have a comprehensive array of protection. Unless u are the invincible Wolverine or Superman, maybe then you do not need it.

Insurance is typically a form of risk transfer. If you happen NOT to claim from it, good for you. These premiums will serve as a form of savings in the long run (depending on which kind of policies). If you happen to claim from it, also good for you, meaning that u are using a small sum of money to 'exchange' for a bigger sum of money. No matter how I look at it, it's a win-win situation.

As a professional IFA, the priorities I would offer to my clients would be:

1) Medical Coverage

- Medical costs in Singapore have been rising more rapidly that the inflation rate. If you think your basic Medishield or company H&S plans are sufficient, think again. There are better plans out there to ensure your bill is controlled to a certain level.

2) Death / Total & Permanent Disability cover

- Nothing can compensate for the death of a loved one, but if the financial aspect is well taken care of, it makes things a little more bearable. This is especially true for people with alot of dependents like a non-working spouse, small children, or even elderly parents.

3) Critical Illness cover

- If you think u are not the unlucky one, think again, and again. From statistics, I think the chances are higher that tio-ing your weekly Toto. No doubt the H&S plans are covered majority of the "in-hospital" expenses, there are other expenses that would not be taken care of... e.g. specialized drugs, well-chair, maid, etc. And critically, it is supposed to replace your income for a reasonable span if well planned.

4) Disability cover

- This is meant to ensure a monthly income payout if you cannot perform your primary occupation because of an injury, accident or any illness. A very simple illustration would be say... an engineer who lost the use of his legs in a car accident. He would be unable to claim from the Critical Illness coverage, but would be entitled to a disability cover (+ perhaps an accident plan).

Do not undermine the importance of insurance. You perhaps just need a good adviser to explain to you the objectives behind each coverage. With proper protection, then you would be well on your way to your other aspects of wealth management.