Thursday, September 18, 2014 5:14 PM / Research
The benefits of insurance are greater than a mere protection against unforeseen circumstances. Insurance has strong potentials to go a long way to help safeguard your earning power.
Just as we have highlighted in the previous article, combination of Insurance policies, from a reputable firm, will give you an opportunity to save, grow your fund and protect yourself against unforeseen health hazards. With this, we have indirectly recommend annuity policy and health insurance policy in our last write-up.
In this article, we want to throw more light on what to consider or look-out for before sign-up an insurance policy. From experience, we advise you against buying insurance just because your neighbour bought it. Buy insurance policy because you need it.
Here are a few points to help you as you go about fulfilling your insurance needs.
What class of insurance policy do I need?
Understand your financial goals. Once you know what your aims and objectives are, you will be in a very clear position to decision on type of insurance that will suit you - protection, savings, investment or retirement.
What will my insurance policy cover?
Different insurance policies have different covers. Make sure the sales representative or financial planner presents you with a list of recommendations, including the types of policies and benefits. Read them thoroughly to be aware of what your policy covers.
How much insurance coverage do I need?
The amount of insurance coverage you need depends on factors such as the number of families, debts or lifestyle and investment/future financial needs.
How much will I be paying for my insurance cover and will I be able to afford the premiums over the long term?
The amount of premium paid depends on the insurance cover you buy. Look at the benefits that match your insurance needs and opt for it accordingly. But you need a help of a financial planner to guide you here- note this is very important.
How Frequent is Payment of Premium?
Choice of Frequency of premium payment period - Single premium, Yearly, Half yearly, quarterly and monthly should be carefully exercised. However, if your policy does not have this benefit, you must find out about the available premium payment plans.
What happens if I fail to make the required premium payments?
Typically there is a grace period (15 to 21 days) during which you can pay the premium with no interest charged. If you do not pay your premium within this grace period, your policy lapses as a matter of general rule.
Should I replace an existing insurance policy?
An insurance policy is a long-term commitment and any decision to cancel a policy should only be taken after careful consideration. Early cancellation of a policy may incur additional fees and penalty charges. More importantly, you may lose out on valuable benefits and huge sum.
If you are unable to continue paying premiums on your current policy, you should consult your financial planner on the options that are available.
On a final note, if you decide to replace your current policy with a new one, we would recommend that you do not cancel your original policy until you receive confirmation that your new policy is ACTIVE. This will ensure that you are not left without coverage during this period.
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