How to Choose Insurance Plan for Yourself and Your Loved Ones

If you’re new to the ‘World of Insurances’, you may not know what insurances to purchase. Some may buy it because the agent’s is their friends or relatives. It could also because they want to help the agent’s meeting his/her production target rather than fulfilling their insurance needs. Whatever the reasons are, it end up that their first insurance plan may be differs from their actual needs.

Most established insurance firms carry out needs analysis session of their potential clients first before recommending any relevant products. The analysis is to understand the potential client’s ASPIRATION, CONCERN and FINANCIAL STATUS before an appropriate proposal can be drafted to meet those needs. Only after the relevant info has been collected, can an insurance consultant work towards addressing the client’s needs.

Being a customer or a client of an insurance firm or broker, you also need to prioritise your needs in planning towards your financial goal. To help you understand what you are looking for in buying insurances, here are some insights that may be useful to you.

  1. First, ask yourself this question: What is the purpose of having insurance? Is it meant for the protection of income for your loved ones? Or to cover your medical expenses due to illness or accidents? Or for your retirement needs? Or to have sufficient funds to send your children for their varsity studies? If you have limited cash to spare on this, start with one or maximum two needs first.
  2. Next, you need to ascertain your affordability. Most insurance plan is meant for a long term commitment. Make sure to keep the plan in force for as long as possible. Early or pre-mature termination of plan may result in loss of benefits or lower return (if any). Some plans have a flexible premium paying term, for example, a plan is still in force after a certain years of premium paying term of 15 or 20 years.

So, what is the best plan for most people? There is no fixed answer to that as every individual needs is unique. Generally, insurance plans are categorized in the following manner:

a) Term Plan – This is the most basic plan for everyone. You can have a higher coverage at the lowest possible premium. Of course, the premium depends on your age at inception of the policy and your medical status. Generally, such plans only provide coverage against death (regardless of the cause) and total and permanent disability. (The definition of total and permanent disability varies from firm to firm.) This plan is also known as ‘pure’ insurance – it only pays based upon the Principle of Indemnity (paid only if there is loss). As the name applies, “Term Plan” has its expiry date, for example, 10, 15, 20, 25 or 30 years from the date of inception or it is tag to the insured age till 60, 65 or 70 years old. If the insured terminates the policy earlier, the premium payment will stop, and so does the coverage.

b) Whole Life Plan – Most working adults would like to have this plan. If you plan to own one, start this plan at a younger age as the premium is much lower. The premium to this plan will be fixed throughout your lifetime (except for addition of riders). It gives you the basic protection against death and total and permanent disability. Whole Life Plan is usually a ‘participating policy’ which means the amount of protection will grow (increase) over the years as the insurance company ‘invest’ part of the premium and give it back to the policyholders through dividends or an added coverage. The amount of dividend paid will fluctuate with the insurance company’s investment performance. Although this plan has a ‘Cash Value’ – which is the amount to be paid out in cash upon its termination, early termination may result in losses and therefore not recommended. As a ‘Rule of Thumb’, policies in force for more than 20 years will have cash value higher than the premium paid. Some of this plan also come with limited payment term whereby the insured only need to pay a certain period, say 15 or 20 years but yet having a lifetime coverage. 
c) Saving or Endowment Plan – As the name implies, this plan is more for those who want to save for certain purposes such as wedding, buying a house, further studies, etc. One thing to note is for the plan ‘to grow’, it requires time. Therefore, this plan works well if your purpose is building fund for your child’s education, planning your own retirement or anything whereby you need cash 18-25 years down the road. Short term planning may not be feasible. This is also a participating policy and has cash value. Once the plan has reached its maturity, the whole policy will pay out and your coverage ceased. You cannot extend the period any further. Therefore, you need to plan properly before taking such policy.

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How Does a Whole Life Insurance Policy Work?

How exactly does a whole life insurance policy work? Whole life policies are popular with some select groups of people but they are a little bit more complex than their plain vanilla easy to understand term life insurance counterparts.

The business of insurance has to be one of the most underrated services offered in the United States nowadays. Not many people think having life insurance is important and because of this we see that the industry is not as successful as the auto and homeowners insurance business. It is important to know however, that death comes at any age; and if a person wants to protect their family or other people after their death it is imperative for them to purchase a life insurance policy.

There are two basic types of life insurance in the United States that work in completely different ways and because of this have different premiums. One of these types of insurances is one that is called a temporary policy. This policy covers a policyholder for about 5 to 30 years and their premiums are most of the time stagnant. On the other hand we have the permanent policy in which members are covered for life as long as they pay all their premiums. Part of your premium will go toward a little saving portion of the policy that will accumulate over time and the other portion of the premium goes towards the insurance cost of the death benefit.

Whole life insurance is one of the three types of insurance polices that you can obtain if you want a permanent life insurance policy. This means that whole life will cover you for life and that your cash value (saving portion) will get higher as time goes by. However, whole life is different in that your cash value is tax deferred until the beneficiary withdraws it and you can also borrow against it.

A person should consider whole life insurance when the need for coverage is lifelong. Whole life may be used as part of your estate planning because it accrues money after a person pays the premiums, as mentioned before. Because premiums for this type of policy are much higher than those of temporary policies, a person must know that this is what they want after all. Whole life is a good choice if you want to make sure that your family or dependents have a good life after your death, and that the transition from the death of a person close to their lives is a close one.

Household Insurance Policy – What Is Covered and Where Are the Gaps

There is a lot of confusion about what an ordinary householders policy covers – all the things people think that they are covered for and are not and on the other hand, all the things they can claim for, and often do not realize they can.

Buy a householders policy which includes the building as well as the contents – otherwise a household fire could cripple your family finances for years.

Gone are the days of fine print exclusions, public opinion has persuaded insurance companies to have print no smaller than normally used in a newspaper. This has now made household insurance companies competing for the consumer dollar never more competitive.

Because of the wide variation in policies, this article is to be taken as a general guide only, raising points to check against your policy where applicable.

Do not take for granted the following points to be covered in your new policy, check first before you sign.

It is wise to check your policy’s renewal cost with what you paid last year, because the insurance company may have increased the premium “to take account of inflation”. Some companies do not make it clear that they have done this.

What is Covered?

Items people can claim for under their normal householder’s policy often do not realize they can! Your householders’ policy not only covers your home – but the entire property including the front garden and the backyard.

This means that you can claim for the theft of everything from the pot plants to the clothes hoist. Many people living in apartments, where clothing has been stolen from washing lines, do not realize that they are also covered for the clothing stolen (whether it is the depreciated or the replacement value depends on the policy).

Travel Insurance – A Must-Have For International Travellers

Travelling is one activity that every individual must undertake at one time or the other; it does not matter what the purpose of travel is, or whether the travel is local or international. A lot of people actually look forward to travelling to other parts of the world for various reasons and purposes, including but not limited to business, tourism, vacation, pilgrimage, education and for medical attention.

The euphoria to travel outside of one’s domain usually comes with a lot of preparations, and more often than not, a great deal of resources are deployed to ensure that the travel is actually takes place; and these include acquisition of an international passport, medical tests (where applicable), expensive visa processing fees, flight booking and hotel reservation.

A lot of people will do anything and everything just to actualise their international travel ambition. And to be very candid here, international travel is actually fun and something to look forward to. Travelling, especially international travels, is a form of education for the travellers as they have an opportunity to see new environments, meet new people, and learn how things are done elsewhere.

International travel affords the traveller a lot of opportunities irrespective of their original purpose of travel. These include business opportunities, educational opportunities, employment opportunities and even marital opportunities. Unfortunately, however, it is only these and many other opportunities that these (would-be) travellers see. They seem to be ignorant or care less about risks that are embedded in international travels, so they don’t take any steps towards mitigating such risks.

At this juncture, you may be tempted to ask the question: “What are those risks that are associated with international travels?” Very good question. Just read on, as most of those risks are discussed in the following paragraphs.

Travel Insurance For Backpackers And Hikers

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If you have a tour in your mind and you want to travel the free way, a good backpacker travel insurance policy is a thing you must consider before tour. Backpacking trips are bit riskier than regular planned travels. So in such case good backpacker travel insurance becomes a mandatory criterion for a hassle free tour.

Most of the insurers don’t know all the benefits of insurance as they are unaware but these insurance policies help a traveler in many ways.

A Backpacker insurance policy is basically for those who are low on budget. You don’t have to pay high for regular insurance policy but you will surely get the essential coverage with backpackers travel insurance policy. It covers you and your luggage at very less cost, as this type of insurance is designed for backpackers who are known for their low budgeted and unplanned travel schedules.

Before going through you must know backpacker insurance policy and its features.

Features provided by backpacker travel insurance

There are some important features and coverage that backpacker travel insurance policy can provide, these are as follows;

  • In case if you have to extend you trip due to any unexpected reason, backpacker insurance covers it too.
  • You get all covers round the clock all the year no matter what time or circumstances are there.
  • If you get sick during you trip, all the medical expenses will be covered by backpacker insurance providers. Most of the time such insurance policies also covers personal incidents that occur during travel (please confirm this before buying insurance policy from you insurance provider).
  • Many travel insurance firms provide option to opt out which they don’t want to be covered and ask for the things which they want to be covered. This flexibility is an added advantage for insurers.
  • Many travel insurance firms provide the option to the insurer that what they really want to be covered in their policy. This flexibility is an added advantage for insurers.