Have you ever wondered if you should or shouldn't purchase an Insurance? You probably think that Insurance is only for people who have too much money to spare right? Well, hopefully these reasons might change your perception about this statement.
1. A Protection Against Premature Loss of Income.
Simply put, the greater your income, the more you stand to lose. The lesser your income, the less your family can afford to lose.
People buy Insurance because they are afraid that they may "Die too soon". Nobody knows how long one's lease on life will run before it expires. Life Insurance provides the means to ensure that an early,untimely death will not at the same time wipe out the potential income that would benefit the family.
2. A Form Of Savings.
Remember how our grandparents used to save their money in Biscuit Tins under their beds? They think that it is a safe place to secure their money. Today, it is more sensible to place it in the bank. However, there is another equally safe and attractive alternative - Life Insurance.
Let's take an example, a man who is able to save $10,000 every year. How long would it take him to accumulate $1,000,000? 100 years - which is practically an impossible task. But through life insurance savings, should death or disability occur, he could be assured of $1,000,000.
Reasons why people consider life insurance a more superior form of savings :
1) It is regular - occasional savings or saving when you feel like it does not guarantee accumulation.
2) It is enforced - you are committed to save a fixed amount every year, at the same time each year.
3) It is yours yet not easily accessible - this removes any temptation to withdraw and use it, thus defeating your original purpose of savings!
3. The Creation Of An Immediate Estate.
One day, we shall have lots of money. And that's possible. That's the same "One day" as in "One day my business will boom". One day.
However, Life Insurance is the only financial instrument that allows the creation of an immediate estate. Right now, if you buy an Endowment-type policy, say of $100,000, maturing in 20 years. You are immediately guaranteed that goal. If nothing happens to you in 20 years, you will achieve that goal with additional bonuses attach to that policy.
However, should something untoward happen during this 20-year period, the goal of $100,000 is still guaranteed, because Life Insurance has created an immediate estate of $100,000.
However, Life Insurance is the only financial instrument that allows the creation of an immediate estate. Right now, if you buy an Endowment-type policy, say of $100,000, maturing in 20 years. You are immediately guaranteed that goal. If nothing happens to you in 20 years, you will achieve that goal with additional bonuses attach to that policy.
However, should something untoward happen during this 20-year period, the goal of $100,000 is still guaranteed, because Life Insurance has created an immediate estate of $100,000.
Well, I Can Still Save It In The Bank Right?
Indeed, you are right. There is still a possibility of saving in the bank. But would you? Banks operate on a different principle. i.e."Save and Create". At any time, the amount of money you have with a bank equals (a) the deposits you currently hold and (b) the interest accumulated or compounded.
Which means if you currently have $10,000 in your bank then that is the total you will ever receive. While Life Insurance acts on the principle of "Create and Save" principle, the exact opposite.
Which means if you currently have $10,000 in your bank then that is the total you will ever receive. While Life Insurance acts on the principle of "Create and Save" principle, the exact opposite.
4. A Provision For Your Child's Education
If your child is smart enough to qualify for university, will you be smart enough to provide for it?
It will be far too late for you to wait till the day he/she gets their results for you to make provisions. Five or ten years before they are due for university is a good time to start a savings plan to accumulate the funds.
The situation may also arise where your child prefers to pursue a certain course of study not available at home and must go overseas. By 2015, the estimated total cost for a degree in United Kingdom is S$216,533. While a degree in United States and Australia cost S$241,249 and S$188,294 respectively.Getting into university is one thing, getting into one's preferred course would be another. Being able to provide for what your child chooses to study is foresight par excellence.
Imagine your child would like to travel to Australia for studies, which would cost an estimated S$180,000. If they were at the age of 25 and repays you S$1,000/month. They would have to be 40 years old before they fully repaid you.
However, what if after you provided, your children do not get a place in any university? In that unlikely event, you can cash the policy and go for a long holiday. You deserve it if they don't.
5. For Medical And Hospitalization Benefits.
A person may look the very picture of health. Yet it is no longer uncommon to hear that some debilitating disease has struck him. In every office, one hears some story like that. Sometimes, there are even stories of apparently healthy people that collapse after a morning run.
Health cannot be guaranteed. Even the most health-conscious person realizes that every year, we deteriorate that little bit more. The irony of it is that people can even die of diseases that they can't declare!
Insurance companies offer a comprehensive range of products that cater to different needs and budgets. Usually offered as additions to existing policies, they alleviate the financial drain of an inevitable illness.
There are many types of coverage, such as Hospital & Surgical Benefits, which provides reimbursement of hospital expenses. In many cases, this may mean 100% of all expenses. The Hospital Benefit provides for an income for every day that the insured remains hospitalized. This is particularly attractive for the self-employed or those without MediSave or MediShield cover. The amount may range from $80 to as much as $200/day.
There are also various other policies that cover against listed Major Critical Illnesses. If an insured is unfortunate enough to contract one of the listed 30 or so illnesses, payment of the sum assured is immediately effected, on presentation of proper documents. This benefit may be purchased as a "rider" or as a "stand alone" policy.
"The biggest killer in a hospitals is not a disease but the hospital bill".
Now that you have read the reasons why you should get an Insurance, what are you waiting for? Contact your Financial Planner to make arrangements now before it's too late!
Hello! My team and I would like to share and discuss topics on financial planning especially on the topic of necessity, and how financial planning interlinks with our daily hectic lives in Singapore! Feel free to ask us any questions and we will do our best to answer any of your queries!
