Yes, you have insurance, but are you really covered?

Do you have many insurance policies but don’t know exactly what you are paying for each month?

Have you bought different insurance policies over the years and can’t remember their coverage details?

Have you tried to understand your policies only to forget them soon after?

If you answered “Yes” to any of the above questions, you are not alone and this post is for you.

When it comes to insurance, I often meet clients who have difficulties understanding what kind of insurance plans they have, let alone remember the amount they are insured for. This is hardly surprising, considering the numerous types of insurance policies out in the market and their various definition of coverage e.g death, disability, critical illness, hospitalisation etc etc..

However, not having a clear picture of what you are covered for can be a painful experience when financial disaster strikes.

The very purpose of insurance is to protect against such disasters, so that you and your family members have something to fall back upon, should the unfortunate happen.

Imagine the emotional trauma if you thought you were adequately covered, only to discover that your policy does not cover the condition or that payout is too little to make a difference!

Here are 3 essential things you ought to know about your insurance:

1) What does your insurance cover?

Most insurance policies covers these 4 areas

Things to note:

* Check the terms and conditions for claim, e.g critical illness cover typically refers to 30 critical illness whose definitions have been standardised by the Life Insurance Association of Singapore and it does not cover for early stages of illness e.g stage 1/2 cancer. More about this in my post “Does your insurance pay out upon early critical illness?”

* Are there any restrictions to the claim? e.g disability income plans usually have a waiting period of 3 or 6 months of continued disability before the benefits are payable.

2) How much are you insured for?

This refers to the sum insured or sum assured that is indicated in your policy schedule. Be sure to note the specific sum insured for each type of coverage, D, TPD, CI etc as they can sometimes differ from each other. Add up all your policies’s sum insured to find out your total current coverage.

Hospitalisation cover are usually on a reimbursement basis rather than lump sum payout for D, TPD or CI, i.e you have to pay for the bills first, then claim back from the insurer. It’s important to know how much of the bill can actually be reimbursed, or will you end up forking out a majority of the bill. Find out more here “3 things you must know about your health insurance”

3) When does the coverage last til?

This is another essential information. Whole life policies will provide cover til age 99, while term and savings plans will typically end by a specific date.

If you own a lot of savings policies, take note of the maturity date of the policies. This is because the coverage under such plans will end once the policy matures and you may find your coverage suddenly dropping to a lower level. Similarly, insurance policies known as “term plans” provide coverage up to a specific age, usually not exceeding 65 or 70.  Make sure that your coverage after the termination of these term or savings plans still provides sufficient protection.

When was the last time you reviewed your insurance policies?

If you recently reviewed your policies within the last six months, that’s great, take this time to check if you still remember the 3 esssential things about your coverage.

If you are like most people who haven’t reviewed your policies in the past 1 year or more, now is the time to take stock of what you actually have and assess the relevance of the policies to your current needs.

You can also take the opportunity to analyse your current needs and see if there’s any gaps in your coverage. As we move across different life stages, our financial needs change along the way. For example, you may have bought your first policy when you just started work, when you have no dependents and have a lower starting pay. Now as you progressed in your career, got married and started a family, you have new needs to provide for your dependents and a higher budget to secure more comprehensive medical coverage for yourself and your family.

Work with a financial advisor who can review and explain your policy details to you. A good financial advisor will be able to work out your current financial needs and goals with you, analyse the shortfall and recommend solutions to close any gaps.

What if I forget? Here are 2 tips to help

a) Have your personal insurance coverage summary that you can refer to easily at a glance

b) Keep your policies well organised in a place where you and your family members are able to find them and know who to contact.

What I usually do for my clients is to summarise their insurance policies into a simple table that shows their total D, TPD, CI, DI, H&S coverage at a glance, so they can easily refer to it whenever they need to refresh their memory. Many clients found the policy summary very useful as a reference guide whenever they need to find out about their insurance.

Review your insurance policy today and enjoy

• Clarity as to what you are actually paying for

• Peace of mind knowing that you are secured with the necessary coverage you require

To Your Success and Happiness,

Yong Hui