7 Ways to Compare Your Insurance
7 Ways to Compare Your Insurance
Htty [ T y p e t h e c o m p a n y a d d r e s s ] Page 1 qwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmrtyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjkl www.SKCagency.com/blog/ 2 7 WAYS TO COMPARE YOUR INSURANCE CONTENTS 1. Types of Life Protection 2. How Do You Replace Your Lost Income With Life Insurance Plan 3. How Do You Compare A Life Insurance Based on Premium 4. How Do You Compare A Life Insurance Based on Features 5. How Do You Compare A Life Insurance Based on Company Reputation 6. How Do You Compare A Life Insurance Based on Charges 7. How Do You Compare A Life Insurance Based on Cash Value www.SKCagency.com/blog/ 3 1. Types of Life Protection No one can deny the fact that life has become very uncertain these days. One only needs to glance at statistics to reveal this very sad aspect of modern times. Over the last ten years or so have medical claims in Singapore has gone as high as $200,000 for a critical treatment such as cancer. Another palpable change that modern time is a witness to is the continuously rising prices. This has forced people, particularly those from middle class to live strictly within their budget. It is here that life insurance proves its utility and reduces the burden of the deceased person's family by paying them the full amount of the policy. Had life insurance not been their saviour, the family would have been shattered on the sudden demise of their only bread earner. Thanks to life insurance, such unpleasant scenario never happens and life insurance ensures that the family does not miss the absence of its only earning member, at least financially. However, one should exercise some precaution before opting for life insurance. Eg. One should ensure that no wrong information is provided to the insurance company, or else any complication might raise its head later. What are the kinds of life insurance plans are there in the market: 1. Term life insurance policy is a cost-effective option at a period in your life when you can't risk being without a life coverage but are financially challenged. However, it does have its disadvantages. If you know how to take care of those you'll enjoy the best of both worlds. Term life insurance has two major disadvantages: It's lack of flexibility and the risk of being declared uninsurable. However, these two broad disadvantages could be easily tackled. You may not be able to get any life insurance protection when you need it most in your life. This is since you'd have to reapply at the expiration of the period or term you bought. Some folks are deemed uninsurable when they reapply and are therefore compelled to be without any form of life insurance protection. To cancel out this demerit, request for a term life insurance policy that is convertible to whole life plans and/or request for guaranteed renewal to ensure you can always renew your term life insurance coverage. You can quickly switch to a whole life policy if you buy a term life insurance policy that has convertibility as a feature This allows you to take advantage of the good points of any policy type at different points in your life. You enjoy the advantages of paying a lot less for considerable coverage when you have a small budget and then change over to another policy as soon as things improve with your finances. 2. Endowment Endowment Save a modest amount monthly and see your savings increase with attractive returns better than bank deposits. Cash Loans can be taken from an endowment plan after some time. Upon Maturity, you receive the the sum assured and your accumulated bonuses as well. www.SKCagency.com/blog/ 4 Upon death or diagnosis of a dread disease, the full sum assured and all accumulated bonuses will be immediately paid in a lump sum. Payment in instalments will be made in the case of permanent or total disability. 3. Whole Life There are 2 types of whole life insurance plan. One is a payment for a certain period of time eg 20 years and the coverage still goes on at an accumulating interest rate even after the payment term is up. Another more common whole life plan is cheaper but it requires continous payment throughout ones life. For some companies, a whole life insurance plan can becomes an annuity which pays out lifetime income at participating value after age 55 onwards. One such company is NTUC INCOME Payout is for Critical Illness/ Permanent Total Disability / Death. Eg. Of critical illness: Cancer Heart attack Coronary artery by-pass surgery Stroke Kidney failure Coma Paralysis (Loss of use of limbs) Heart valve surgery Blindness Deafness (Loss of hearing) Loss of speech Multiple sclerosis Fulminant hepatitis Major organ/bone marrow transplantation Primary pulmonary hypertension Alzheimers disease/severe dementia Surgery to aorta Major burns Terminal illness HIV due to blood transfusion & occupationally acquired HIV End stage lung disease End stage liver failure Muscular dystrophy Parkinsons disease Aplastic anaemia Angioplasty (partial payment) & other invasive treatment for coronary artery Bacterial meningitis Benign brain tumour Encephalitis Motor neurone disease 4. Investment Link Plans These are investment plans. Watch out if these plans are sometimes merged with term policies. Mortality charges can be very high and borne by customers at higher ages. See more under article: How Do You Compare A Life Insurance Based on Charges / Policy Fees www.SKCagency.com/blog/ 5 5. Hybrid Plans This is a very new term. It is a combination of endowment and investment plans, giving people of earning traditional guaranteed returns as well as earning the chance of doing investments. One such example is NTUC INCOME REVOSAVE (see: http://www.skcagency.com/blog/new-plans/new-revolutionary-savings-plan-launched-revosave) www.SKCagency.com/blog/ 6 2. How Do You Replace Your Lost Income With Life Insurance Plan If you should become unable to work due to accident, prolonged sickness or through unemployment such as unforeseen redundancy due to a disability then you would probably find yourself having a real struggle to pay for your essential daily expenses unless you have income protection to safeguard against the loss. Once you have been diagnosed with a critical illness or disability, then the policy would kick in and you would receive a tax free amount each and every month. For a death claim, the returns would usually be refunded to the beneficiaries nominated by the policyholder (this is allowed in some companies, eg. NTUC INCOME) or in a will. You do however have to ensure that a policy would be suitable for your needs and that if you should have to make a claim, you would be able to do so without any problem. An life insurance or income protection insurance plan will give you a tax free sum of money each and every month once you have any of these 3 cases: death/ disability/ critical illnesses. It will then continue to cover your lost income up to a set amount for up to retirement age. Payout is immediate on critical illness; partially over 5 years till completion for a disability coverage and immediate to the beneficiaries for death. Usually Permanent Total Disability can be paid over 5 years (1st-4th year 10% payout each and 5th year 60%) A Life insurance is an invaluable safety net on which you can fall back on should as a breadwinner falls sick and the family needs the money for daily expenses and the breadwinners medical expenses. It should be noted that at the time of taking up, one must be health and not suffering from a pre-existing medical condition otherwise there might be a loading increased premium or exclusions. You should always check the small print for any exclusions along with the key facts regarding an a life insurance policy and you can get these facts from a standalone provider if you are not sure. If you are looking for the best deal, there are 7 ways to look and compare a policy: (1) Premium, (2) Protection Value, (3) Cash Value, (4) Distribution Cost (5) Company Reputation (6) Features (7) Charges / Policy Fees www.SKCagency.com/blog/ 7 3. How Do You Compare A Life Insurance Based on Premium As the market has grown yearly, technologies have also improved. Now, instead of you going to any signpost office to do any payment, you can choose to do it through certain channels. Channels such as the Internet, credit card or GIRO. For the services of the Internet, you can use it to pay for the bill at any part of the world, example: The Policy Online aka POLE system with NTUC Income. For credit card, you can choose to pay it any AXS machine, online or at any of the branch office. For the GIRO, all you need to do is to get a form from the bank to fill up and money will be debited from your account monthly. The most commonly used channel will be by paying it with cash. Premium payment can be done by the channels mentioned above. The definition of premium refers to the amount you give for the policy in return for the coverage by the insurance company. You have the choice to choose how frequent you want to make payments for the premium. It ranges from monthly, quarterly, half yearly or yearly. The bigger lump sum of money you paid for the premium, the more discounts would be given to you. At times, premium would be affected based on the distribution cost. The reason why some of the plans have higher cost, as companies will have to pay distribution cost to the managers or supervisors before paying the agent. The advantage is your agent will provide you with a better service. Whenever you need their advice, all you need to do is to give them a call and they will be most welcomed to accept your call and advise you on the issues that you have enquires on. Nowadays, some of the premium plans have changed to the limited premium so that it enables you to save a large sum as compared to premium plans, which are continuous. . www.SKCagency.com/blog/ 8 4. How Do You Compare A Life Insurance Based on Features When people buy policy, they will think to themselves, what kind of the policy do they want so that they can insure themselves with some protection. Are you looking for an investment plan, life long plan, maturity time or a flexible plan? Investment plan allows one to do investment and get back the money at the end of every year. You might not need to do it yourself as there is a banker who helps you to monitor your investment and inform you when to buy it or sell it. However, theres a price for that, the bonuses that you get back at the end of the day will be lesser as you need to pay some charges to the banker for monitoring your investment. The advantage is that you do not need to do the check on your own and will not miss any great deal. The disadvantage is there is some price you need to pay to the banker in order for the investment to grow. Life long plan allows you to be insured with policy that gives you the protection of coverage. If one suffers any illness, they will still be able to have money for them to tide them of the bad times. It will lighten their burden if they need to have frequent medical checkout or need to take long leave from their work. Flexible plan enables one to withdraw the amount that he put in initially at any time. There is no restriction of how many years would one need before he can surrender it. Currently, there is a new plan on the market that gives a hybrid of both investment and insurance protection. For example, NTUC recently has just launch Revosave Savings Plan which is also known as the Erosive. Its a 3 in 1 flexible saving plan, it allows one to save, invest and at the same time get insurance protected. For example, if one saves $500 a month, every year one would get back at least $2000 guaranteed. Starting from the third year, one can withdraw out on a yearly basic and still able to get back capital guaranteed which had been put in initially. One can also choose to redeposit the yearly cash-back given at 3.5% per annum with the company or reinvest it at 9% per annum returns without any charges. If the insured suffered any critical illness, NTUC INCOME will still give the insured $2000 yearly based on the $500 that one saved and one does not need to come up with any single premium anymore. www.SKCagency.com/blog/ 9 5. How Do You Compare A Life Insurance Based on Company Reputation Before you purchase anything, you would check on the product of the company to see whether is it reliable or trustworthy. Theres a term most professional will always use track records. What doest that actually means? It means refers to read up on the history of the company whether are they able to project the cash value or the premium as they promised to the customers. One of the ways they do is through advertisement. For example, best keep secret ads. In market, sometimes you heard or read before that some insurance company are not able to produce the cash value when the maturity is due or they are not able to stop the premium for some of the policy during the critical years. Certain companies are still able to do it as they have cooperative bonus which allows they to give additional cahs value as bonus to the policy holders. One such company is NTUC Income. For any person who wants to do investment, it is always advisable to look at the investment performance of the company whether they can fulfil a track record of returns. The company will also be trustworthy if they are supported and rated by famous bodies like S& P. S & P refers to Standand & Poors. Standard & Poors is a leading provider of financial market intelligence. This is the worlds foremost source of credit ratings, indices, investment research, risk evaluation and data, which provides financial decision-makers with the intelligence needed to feel confident about their decisions. Most investors know Standard & Poors for its respected role as an independent provider of credit ratings. Standard & Poors global organization provides a wide array of financial data and information and Is the largest source of independent equity research and a leader in mutual fund information and analysis. To check whether is a company is reliable, you can check them out in the S& P website before doing an investment www.SKCagency.com/blog/ 10 6. How Do You Compare A Life Insurance Based on Charges / Policy Fees Traditional whole life and endowment policy are able to give you a form of guarantee cash value, however the initial cost factor is very high in the initial years. The advantage is company will be able to give you long-term guarantee coverage. Operation cost will refer to the distribution cost. Distribution channel refers to the insurance company doesnt take the risk on its own. Usually they distribute the risk to other re-insurance companies. In exchange, the risk came in as a cost fact when the insurance company engages actuarial and under-riders. A product that is developed from actuarial and under-riders will then further be distributed by the company in different channels to the agents or financial planners before to the customers. This process of distribution channel form the company via the financial planners to the customers comes in a few ways: 1. Agency Managers will distribute the financial product (e.g.: Insurance) to the supervisors before they assigning to the agent. The agent will then source out to their customers before advising and selling them the product. This cost naturally will come in through the over-riding from one to another. 2. Company They will distribute their customers directly via the financial planner. 3. Brokers If customers require advise or information from the brokers, they will charge them a profession fee. 4. Company to full time staff Company will assign the full time staff to advise on the customers in whatever doubts they have. All the above factors are cost factored in and will affect the total cash value that the customer will require to pay before they are able to seek some advise from the professional. The cost can all differ by having the agents to allow you to save the time and reduced the suffering when come to choose an ideal plan for the customers that will suit to their needs. Non-traditional policy such as the investment plan will have other fees involved. These include advisory fees given to your financial planner or brokers; policy fees to the company when they created your policy; annual management fee given to the fund managers, etc. It is important to look at all these cost factors before consider buying an investment plan either through the Internet or agents. If one doesnt know how to do proper investment, it is important to consult a financial planner who will be able to give www.SKCagency.com/blog/ 11 you their most professional advice to assist you. Other than that, theres bid offer spread and some are higher especially in bank and the lower is through the Internet. Sometimes, Companies such as NTUC income gives lower or no bid offer spread. One such example is REVOSAVE. Before you do any investment in future, look at the terms and conditions that a company will offer to prevent yourself from getting bankrupt. www.SKCagency.com/blog/ 12 7. How Do You Compare A Life Insurance Based on Cash Value? Have you ever wonder how do you compare a life insurance based on cash value? Why would you want to compare? The reason why you want to compare it is to give yourself a clearer view of how a life insurance is based on the cash value and it gives you an idea what kind of payments you would use to pay for your insurance. For a life insurance based on cash value, there are factors such as the distribution cost and charges or policy fee that will be involved in one way or another. Its always the case, the amount you pay higher, you will get lesser in return. It applies the same concept. Cash value would be lesser if distribution cost/ charges/policy fees are higher. Usually, it depends on the company on how would they want to charge you. One advantage is to check whether is there any bonuses involved. You can find it our by asking your agent or the company to see if theres any bonuses included in the plan or the company do offer bonuses. A co-operative concept plan would give the bonuses usually to one more compared to another. Whenever you read the newspaper or the e-news, you might have come across the phrase distribution channel. Any idea what does that refers to? Distribution channel refers to the insurance company doesnt take the risk on its own. Usually they distribute the risk to other re-insurance companies. In exchange, the risk came in as a cost fact when the insurance a company engages actuarial and under-riders. A product that is developed from actuarial and under-riders will then further be distributed by the company in different channels to the agents or financial planners before to the customers. This process of distribution channel form the company via the financial planners to the customers comes in a few ways: 1. Agency Managers will distribute the financial product (e.g.: Insurance) to the supervisors before they assigning to the agent. The agent will then source out their customers before advising and selling them the product. This cost naturally will come in through the over-riding from one to another. 2. Company They will distribute their customers directly via the financial planner. 3. Brokers If customers require advise or information from the brokers, they will charge them a profession fee. www.SKCagency.com/blog/ 13 4. Company to full time staff Company will assign the full time staff to advise on the customers in whatever doubts they have. All the above factors are cost factored in and will affect the total cash value that the customer will require to pay before they are able to seek some advise from the professional. The cost can all differ by having the agents to allow you to save the time and reduced the suffering when come to choose an ideal plan for the customers that will suits to their needs. 1. Types of Life Protection2. How Do You Replace Your Lost Income With Life Insurance Plan3. How Do You Compare A Life Insurance Based on Premium4. How Do You Compare A Life Insurance Based on Features5. How Do You Compare A Life Insurance Based on CompanyReputation6. How Do You Compare A Life Insurance Based on Charges / PolicyFees7. How Do You Compare A Life Insurance Based on Cash Value?