Insurance Basics (2024)

Key Takeaways

• Insurance policies help you cover your loss should something happen –what they cover depends on the specific policy

• Strike a balance between coverage and affordability – buy only what youneed

Insurance is meant to protect you, your family and things you care about.The insurance you buy depends not only on what you want to protect butalso what you can afford.

Some insurance policies are must-haves. You can’t drive without car insuranceor get a mortgage without fire insurance in most cases.

With so many types of policies out there, how do you choose the rightone? What do you look out for? Even if you can afford it, you don't haveto buy them all.

Types Of Policies

Here are 3 main types of insurance policies and their purpose:

Life Insurance

Health Insurance

General Insurance

How Insurance Works

Assess Your Needs And Choose A Policy

The first question to ask yourself is, do you need insurance at all? Ifyou're unsure, take a look at what you have now — your work, life, familyand everything you worked hard for. Which part of it do you want to protectif something untoward was to happen to you? Your answer can lead you tothe type of insurance you need.

Your insurance policy is a contract that lists exactly what you want toprotect against. For example:

• Death of the breadwinner

• Total and permanent disability

• Critical illness

• Loss of belongings

• Damage to your car

• Damage to your house

Pay The Premium

Premium is the amount you pay for the insurance. It could be monthly,quarterly or yearly. It could also be a one-time payment for travel insurance.

Generally, it costs less if you pay the premiums annually instead of monthlyor quarterly.

The amount of premium depends on the risk and on the value of the potentialloss you’re being insured for. For example, you may want your family tocontinue to receive your monthly income if you pass away prematurely soyour insurance policy will cost more for this benefit.

Make A Claim

If something happens that’s covered by the policy, you can claim on yourinsurance. Tell the insurer what happened, they'll investigate and if theclaim meets with what you’re protected against, then they'll pay you asagreed.

Before You Buy: Things To Look Out For

Before committing to an insurance plan, run through this checklist tomake sure you know what you’re buying.

• Can you afford it?

• Is it a bundled product?

• What about short-term policies?

• Can you switch policies?

• Are there limitations?

• Do you know what you're signing?

• Have you disclosed everything?

Before Buying, CompareFIRST

You should always compareFIRST before deciding which life insurance productto buy.

CompareFIRST isan information portal on insurance products. It allows you to compare thepremiums and features of life insurance products available to the retailmarket in Singapore.

You can customise your search by selecting:

• The coverage you want

• Premium type and coverage duration

• Inclusion of critical illness riders

After that, you will get a list of life insurance products for you tocompare side by side.

Don't buy an insurance product based on the premiums alone. Also lookinto the benefits, features and coverage of the product and assess if itmeets your needs.

After You Buy: 14-day Free Look

After you've bought a policy (any policy except travel, car and maid insurance),you have at least a 14-day free look or cooling-off period for you to reviewit. The free-look period starts from the date you receive your policy document.

Read through the documents carefully and see if the policy meets yourneeds.

If you decide not to keep the policy, write to the insurer to cancel itwithin the cooling-off period. The insurer will refund all premiums lessmedical and other expenses incurred. For investment-linked policies, theinsurance company may work in any change in the market value of the policy.

Always check if the policy you're buying has a free-look period.