There are many types of insurance products, with their own individual features and benefits. On the whole, insurance products serve their own purposes and have their own level of importance.
But how important is that insurance to an individual depends on the level and amount of risk that this individual would like to be taken care of.
So How Do You Define Risk And How Insurance Can Help You Today
1. Premature Death
Premature Death comes with its own risk. If you are gone yesterday, what is the financial impact that you would leave for your immediate family members? Will you be leaving behind any credit card debts, mortgage loans, or an university education fund for that little child of yours?
If you do not have enough monetary resources set aside to take care of these risks at this moment, and you know that these are your concerns, then you would appreciate the importance of having insurance to protect you.
Insurance plan like Term Insurance serves the purpose of protecting your immediate family against your premature death. By servicing a small amount of premium every month, you can be assured that a lump sum of money will be there to take care of your immediate family.
But do note that for most Term Insurance, at the end of the coverage term, if there is no claim, the total premium paid would not be returned to you. Therefore you would need to understand that you have actually paid for a Peace of Mind during those time. Term Insurance does serve its own purpose of importance.
If you like the idea of having some form of savings included, then you would want to look into Whole Life Insurance for the more conservative or an Investment-Linked Insurance for the more risk-takers.
2. Critical Illnesses
The risks that one can have from Critical Illnesses would be the loss of income during the treatment and recovery period, the treatment costs needed and the financial impact that you would have on your immediate family who need to take care of you.
Similarly, understanding this risk and that your monetary resources are limited, you would need insurance to protect you. There are various forms of Critical Illness Plan that pays at different stages of your illnesses thus making sure that you have a lump sum of money ready to take care of the treatment, your income loss and some form of compensation to your immediate family to nurse you back to good health.
3. Medical Bills
Medical Bills could be from your illnesses or even due to accidents. The major risk comes from that a sudden illness or major accident could slap you with a very big medical bills. Therefore you would need to know how prepared are you against this.
If you are not ready, then it is important you need to transfer this risk to an insurance plan like Health Insurance which will take care most of the medical bills.
Even if you have concerns against minor risks (every individual is different) like outpatient medical bills, you can always turn to insurance to take care of them.
4. Saving For Retirement
The risk of not planning well for your Retirement would mean that you would not have enough to take care of yourself during your official non-working time. You would have to resort to a simpler life. You may even have to depend on others. I believe you would not want this at all.
If your current planning is limited or not giving you significant results, you can always turn to insurance to help you along.
If you are very conservative and cannot take risk at all, there’s always Endowment Plan to help you to save. The returns may not be enough to cover against inflation. But at least the returns are better than leaving your money in your bank account.
There’s also Investment Plans like Unit Trusts that can help you to plan for your retirement as long as you are able to take in the risks.
5. Take Care Of Your Assets
Your most prized assets could be your house or your car. You would definitely not want any form of damages on them, especially those that involve major costs. If you have concerns against this, you can always spread the risk with others who have the same concerns by getting an insurance.
At the end of the day, the level of importance of any insurance would depend on the level of risk that you would have. If you ever feel that some risks would have a major financial impact on you or your immediate family, then you would be assured that insurance can help you to minimize those risks – that’s its importance!