Types Of Life And Health Insurance Everyone Can Benefit From30 Apr 2021
There are risks in business and everyday life which can result in financial loss. To manage these risks, a common solution is to use insurance, where you transfer the cost of a potential loss to an insurance company. In return, the insurance provider charges you a fee called a premium, which you pay annually or monthly.
Everyone can benefit from having insurance. It takes on many forms but they all serve a primary function - as a buffer against unforeseen loss or damage. For this article, we will focus on the two types of insurance everyone should have - life and health.
Life insurance is recommended for all, even if you’re young and single. It's even more important if you have a family or people who depend on you for their financial needs. Its main purpose is to provide for those you leave behind, should the unexpected happen to you.
The most basic and least expensive form of life insurance is a term policy, which provides coverage for a set period (eg. 20 or 30 years). It comes with no cash value, and the premiums increase with age.
A life insurance plan can also serve as an additional source of income, or as a savings vehicle to help fund your child’s education or your retirement. These features can be found in the following types of life policies:
a. Investment-linked Insurance
An investment-linked insurance plan (ILP) is a 2-in-1 life insurance policy that combines protection and investment. It has become a popular choice over the years for its affordable premiums and potential as a source of passive income.
ILPs offer a cash value benefit, which comes from the premiums that are used to purchase units in selected funds for investment. The cash value is accumulated over time and once it has grown into a sizable amount, you can opt to make use of the earnings to pay your premiums, make a purchase, cover unexpected costs, or even to grow your retirement fund.
However, like other financial investments, ILPs come with investment risks, which means returns are not guaranteed as the value will fluctuate according to market conditions.
b. Endowment Insurance
An endowment plan is another form of life insurance which doubles as a savings plan. This pool of savings is called a maturity benefit, which is an assured lump sum, plus any additional bonuses, that you or your beneficiary will receive at the end of your policy’s term. The payout you receive can be used to fund a long-term financial goal such as your child’s education or your retirement fund.
Some endowment plans only require a short-term premium commitment (10 or 20 years) for you to enjoy the long-term benefits, compared to regular life insurance where you pay your premiums until your policy matures.
With healthcare costs continuing to rise every year, health insurance has become a necessity. We can never predict when accidents happen or an illness strikes. So when you or a family member get injured or fall sick, having a health policy will help ensure you and your loved ones have access to adequate and timely medical care.
The more common types of health insurance include:
a. Medical and Hospitalisation
This provides coverage for expenses incurred during hospitalisation due to injury and illness. It usually includes cashless and hassle-free admission, i.e. your medical bill is sent directly to the insurance company, which saves you the trouble of having to pay first and claim later.
b. Critical Illness (CI)
A CI policy pays you a lump sum upon diagnosis of any of the 45 critical illnesses, which include cancer, heart attack, stroke, Alzheimer’s disease, Parkinson’s disease, blindness and kidney failure.
c. Hospital Income Insurance
This policy protects you from income disruption by paying you an agreed amount of cash on a daily, weekly or monthly basis when you are hospitalised.
d. Female-related Insurance
This type of policy covers female-related illnesses or events such as breast cancer, ovarian cancer and pregnancy, which are not covered by regular medical plans.
The above insurance plans are arguably the most important out of all the types of insurance in the market. Protecting our loved ones is always a priority, and everyone needs healthcare.
Take a look at the range of life and health policies we offer here. Our Gibraltar BSN Agents can help customise a plan to suit your age, income, lifestyle and number of dependents. Whenever you are ready, simply get in touch with us here.